Housing industry 'rebound' observed

The housebuilding industry showed signs of recovering during the first quarter, with the number of new properties started jumping by 26%.

A total of 29,140 homes were begun during the three months to the end of March, 26% more than during the the previous quarter and the highest level since the second quarter of 2008, according to Communities and Local Government.

The increase follows two consecutive quarters during which housebuilding numbers had fallen, while the level of starts was 88% higher than when figures hit their low in the first quarter of 2009.

Within the total, house building by private developers was up by 24%, while starts by housing associations jumped by 37%.

But commentators warned that although the increase in new build numbers was good news, it was likely to reflect the fact that starts had been impacted during the previous quarter by the bad weather.

Although the number of new homes started in the 12 months to March rose by 22% to 106,590, this was also still around half the level that is needed to meet growing demand.

The housebuilding industry was hit hard by the credit crunch as developers struggled to raise the finance they needed, while consumers could not get mortgages to buy new homes.

The problems led to many sites being mothballed, while other planned developments were never started.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said: "Data released this morning shows a welcome rebound in housing starts in the first quarter of the year, but this increase largely reflects a recovery from the weather-induced weak reading for the final three months of last year.

"Even allowing for this improvement, the underlying picture still remains a cause for some concern. The trend rate in delivery for housing starts is currently running at little more than 100,000 per annum, against estimates of new household formation running at more than double this figure."

The number of new homes being built has been on a gradually upward trend since the beginning of 2009, despite the dip seen in the second half of 2010.

This recovery is now beginning to feed through into an increase in the number of properties that are completed, with finished homes rising by 25% during the first quarter to 29,380.

A total of 105,930 homes were finished during the year to the end of March, 7% less than during the previous 12 months and around 60% below pre-credit crunch levels.

The number of new homes started was higher in all regions of England during the year to the end of March, with London seeing the biggest jump at 52%, while the South East saw the highest number of properties begun at 19,740.

But when the first quarter is compared with the same period of 2010, the number of new homes started actually fell in the North East, North West, Yorkshire and Humber and the West Midlands.

Housing minister Grant Shapps said: "Today's figures are welcome, but they are only the start of the story.

"The construction industry that builds the homes this country desperately needs can also expect more help.

"We will work closely with housebuilders and listen to their suggestions about how we can improve, and continue to strip away the bureaucracy and red tape that for so long has piled unfair costs on this vital sector of our economy."

Campbell Robb, chief executive of housing charity Shelter, said: "While house building figures released today show housing starts have increased over the last quarter, it is still a pretty bleak picture for housing with delivery nowhere near meeting need.

"Changes mapped out in the Localism Bill giving local government more power over housing and planning decisions mean it is now absolutely essential that local authorities start to prioritise spending on housing delivery so people in their area can access a decent and secure home.

"Building more homes is the only way we can solve our housing crisis."