House Building Strongest Since 2007

23 October 2014, 06:02 | Updated: 23 October 2014, 06:48

House-building activity is at its strongest levels since 2007 as the recovery broadens out beyond London to the rest of the UK, an industry body has reported.

But the National House Building Council (NHBC), which released the figures, also warned that small builders are still struggling to raise finance from "risk averse'' lenders and the industry as a whole is seeing shortages of skilled people such as bricklayers, carpenters and decorators as work picks up.

The NHBC has recorded 107,017 registrations for house building between January and September 2014, marking a 6% increase on the same period a year earlier and the highest year-to-date total seen since 2007, before the economic downturn struck.

Within the total for this year so far, 36,343 registrations were recorded between July and September, which is also the strongest total for the third quarter of the year since 2007 and an 8% jump compared with the same period in 2013.

The NHBC's registration figures are taken from builders who are responsible for around 80% of homes constructed in the UK. Builders are required to register a house with the NHBC before starting work, which means its figures records represent homes that are to be built in the months ahead.

The NHBC, a non-profit body which provides warranties and insurance for new-build properties, said its latest figures show that the house building recovery is "genuine'' and "broad-based'', with pockets of strong growth seen in the North East, Yorkshire and Humberside and the West Midlands.

It said: "Housing growth is no longer London and South East-centric, with these regions beginning to show signs of cooling.''

Compared with the third quarter of 2013, house building registrations in the third quarter of this year shot up by 71% in Northern Ireland and by 63% in Wales, although both these figures were increases from a relatively low base.

New registrations in Scotland were up by 9% between July and September compared with a year earlier, while those in the North East and Yorkshire and Humberside were up by one third (32%) and those in the West Midlands surged by 51%.  

In London, registrations were up by 6% in the third quarter of this year compared with a year earlier, but in the South East they have fallen by 15% compared with a year ago.

Mike Quinton, chief executive of the NHBC, suggested that London and the South East could in part be seeing slowing in the pace of building activity as people look for more affordable homes outside these areas.

House prices in London in particular have surged over the last year and some recent housing market studies have suggested that more house hunters are starting to cast their nets wider than the capital.

Mr Quinton said that while the building figures for the South East are still relatively strong, "builders have seen there is demand further up the country''.

Explaining the particularly strong growth in building registrations in Northern Ireland, he said that many sites there are now being reactivated after having stalled as the economic downturn took hold.

The figures also show that rising numbers of people aged over 55 years old are snapping up new-build homes, while the proportion of younger people who are buying them is decreasing.

Mr Quinton said this could partly be explained by younger people still struggling to get onto the property ladder, while at the same time new-build homes are becoming increasingly attractive to older people who are looking to cut their household bills. Some 26% of people who bought a new-build home in the first half of 2014 were aged over 55, while 7% were aged under 25.

The NHBC also carried out research among around 500 small builders and developers to find out what obstacles they are facing, as many smaller companies are not showing growth as the recovery gains momentum.

Around one quarter of smaller companies (22%) cited obtaining finance as a challenge, and for many the unwillingness of banks to lend, together with the conditions imposed appeared to be "serious barriers to their business'', the NHBC found.

It quoted one small builder as saying: "The large banks impose impossible conditions on small builders. They continually change their staff and don't understand the business.''

The NHBC said in general, skills shortages being seen by firms across the country, with bricklayers, carpenters and decorators all in strong demand. More needs to be done to improve the availability of skilled tradesmen going forward, it said.

Communities Secretary Eric Pickles said: "Thanks to our long-term economic plan, house- building is at its highest level since 2007 and continuing to grow.

"Policies like Help to Buy and the reinvigorated Right to Buy have brought confidence back to the market, and are helping first-time buyers move on to and up the housing ladder.''