Housebuilding is up ‘but supply is still way behind’

Housebuilding is rising across the country as confidence returns to the property market, according to the latest survey by the Royal Institute of Chartered Surveyors (Rics).

During the three months to September a positive balance of 41 per cent of construction firms questioned by Rics reported an increase in housing projects on the preceding quarter. This was up from a positive balance of 31 per cent in the previous three-month period. The survey also showed activity up in every part of the UK in the third quarter for the first time in six years.

But Rics pointed out that housing growth was still falling well short of demand, which has been stoked by the Government’s housing subsidies, pushing up prices.

“We are certainly not out of the woods yet,” said its chief economist Simon Rubinsohn. “Critically, we’re still way behind in terms of building enough homes to meet the nation’s growing housing need and overall construction projects are at a historical low.”

Yesterday Martin Taylor, a member of the Bank of England’s new super-regulator, the Financial Policy Committee (FPC), said it was not the Bank’s job to regulate house prices. “I don’t think, personally, that it should be the FPC’s job to stop house prices going up,” he said in a speech in Wolverhampton. “Indeed, if you have an economic recovery, rising numbers of households and very tight supply – all of which we seem to have at the moment – it would be surprising if they didn’t.”

Another economic reality check came from the Confederation of British Industry and accountants BDO, who reported that many smaller firms are not getting the growth finance they need to boost exports. Their survey says only 52 small and medium-sized enterprises got direct assistance from UK Export Finance over the past year. The CBI and BDO estimate medium-size firms could be worth an additional £20bn if they had export finance.