House build data of great concern

Nia Williams

August 19, 2010

Commenting on the latest house building start figures released by Communities and Local Government (CLG), Simon Rubinsohn, RICS chief economist said: “Data released this morning shows the number of housing units started in the second quarter of 2010 in England rose to 28,590, the highest level since the second quarter of 2008.

“Both the private and public sectors contributed to the better numbers, which in aggregate were 13% higher than in the first three months of the year. While on the face of it this appears encouraging, there are good reasons for questioning whether this more positive trend will be sustained for the rest of this year and into 2011.

“The recently published RICS Construction Market Survey shows new enquiries to begin housing projects actually turned negative in the second quarter of this year. Meanwhile, the Home Builders Federation has highlighted a drop in site visits and an increased use of incentives in its latest report.

“With HCA funding being scaled back, a drop in house building from the social sector is inevitable. Meanwhile, with the private sector now in the process of replenishing its inventory, the likelihood is that its output will soon begin to stabilise.

“Critically, we suspect that housing starts this year will amount to around 110,000 and the number for next year will be little higher. With demographics arguing for more than double this total on the most recent analysis, the prospect of a medium-term shortfall of good quality homes is a very real concern.”

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