The latest figures from the Office of National Statistics shows that construction output has risen by 0.8% in the third quarter of 2014 when compared with Q2 and a growth of 2.9% year on year growth, much of the rise being attributed to the government’s help to buy scheme and the banks increasing willingness to lend.


The housing sector was worth almost £7bn to the construction industry in the third quarter, up 5% on Q2 and up 22% when compared to the same time last year.


David Newnes of Your Move and Reeds Rains estate agents believes the Help To Buy Scheme and the increasing number of mortgage applications getting passed by banks with smaller deposits have both played a significant part in increasing the prospects of the construction industry over the last quarter.


Newnes argued: ‘This injected new energy into the construction sector, but although house building is making headway across the pitch, we’re still a long way from seeing the form that was in evidence before the crash,’
‘House price inflation may have been reined back from the intensity witnessed earlier this year, but in the long term building new homes remains key to ensuring that competition over available property and price rises stay at healthy levels, and don’t eat away at consumer confidence,’


‘Higher LTV lending dipped last month, as new loan to income caps came into force. We need to ensure that the bottom of the market stays firm, anchored on a solid bedrock of plentiful supply of starter homes,’ he added.


Andrew Bridges, managing director of specialist London estate agents Stirling Ackroyd, believes that gradual progress won’t be enough for the construction industry. ‘This growth is still slower than the rest of the economy and not yet fast enough to capture the true scale of opportunity,’ he said.


‘Homes are most sharply sought after, and that’s reflected in the best figures for the housing portion of output since 2007. But prices are also higher, and volumes tell a different story. Across the country, we’re still only building around half the number of new homes each year as was achievable before the financial crisis. Rapid progress needs to continue, and accelerate,’ he pointed out.


‘This also leads to another vital point; construction is about more than just numbers of homes. New places to live need access to quality infrastructure and well paid jobs. Location matters, and for new homes that means proximity to centres of employment. That’s one of the reasons why London’s new homes market is outpacing the rest of the UK.’


He concluded with: ‘At heart, construction is about building future prosperity, the two are intricately intertwined. So these figure represents far more than just a portion of total economic growth. New homes, offices and infrastructure will support every other element of our lives and livelihoods.’

 

This should be music to the ears of homebuilders, renovators and small traders in the construction industry as lending on new homes will signal more homes to be built around the country and whilst some areas are still living with slightly depressed prices we can expect more redevelopment of residential properties to increase their value beyond the amounts they've been sitting at.