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House building fell 11% in Q1

The latest data from the Office for National Statistics on UK house building shows house building starts stood at 24,140 for Q1 2012, down 11% on Q4 2011.

Private enterprise housing starts were also 8% lower in Q1 2012 compared to Q4 2012 while starts by housing associations were 21% lower.

On the plus side, completions were up 6% on the previous quarter at 31,010, and private enterprise and housing association completions both increased by 8%. New housing starts are also currently 42% above the trough in Q1 2009.

But the latest figures are still 50% below the December quarter 2005 peak and completions are 36% below their peak in Q1 2007.

Simon Rubinsohn, RICS Chief Economist, says that a key factor continuing to hold back development at the current time and probably for the foreseeable future is the lack access to development finance.

According to the most recent RICS Construction Survey, close to two thirds of respondents have seen no evidence that finance is becoming more readily available; a mere 15% have seen an improvement.
He says: “The data released this morning clearly demonstrates that housing delivery is, at the current time, falling well short of expectations. The number of starts in the first three months of the year was not only sharply down on Q4 2011 but actually the most disappointing number since the Autumn of 2010. Significantly, the drop in development activity was visible not just in housing associations and local authorities but also in the private sector.

“There are good reasons for expecting government policy to gradually have an impact on the level of starts. The NewBuy mortgage indemnity scheme only started a couple of months back and is taking a while to gain traction. More important for the medium term could, however, prove to be the planning changes that has been pushed through by the government. But even if the measures do begin to pay dividends, it is hard to see to the increase coming anywhere near the level of new housing required.”




Rebalancing the economy comes at a price

Economic data released in recent months has been disappointing to say the least. Q1 gross domestic product figures put the UK back into recession along with several other European economies. The economic optimists keep dismissing the official output data and choose to emphasise the more upbeat business surveys.


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