UK Needs To Build Its Way Out Of Recession

UK Needs To Build Its Way Out Of Recession

The UK Government must do more to help stimulate the country’s economic growth, to boost the supply of new residential properties and build its way out of a potential triple-dip recession.

This is the view of the Federation of Master Builders (FMB), as the latest ONS GDP figures released showed output in the sector rose by just 0.3% in the final months of 2012.

The FMB point out that overall the UK economy shrank by 0.3%, keeping the country still struggling to escape the grip of recession, while there was a small increase in construction output.

This follows a fall of 2.5% between Q2 and Q3 of 2012, which as a whole was a really bleak time for the UK construction industry.

Brian Berry, Chief Executive of the FMB, said, “It is clear from the Deputy Prime Minister’s recent comments that Government now realises the wider economic benefits that capital investment via construction can bring, however it must do more to unleash the potential in our industry by pulling the right levers. Our members are ready to help Britain build its way back to growth, in the process helping meet the spiralling housing crisis and improving energy efficiency in homes and businesses. But we can’t do this alone. Government must meet construction firms halfway, and find imaginative new ways of increasing activity in the sector, particularly for small, local builders who may not immediately benefit from major infrastructure investment.”

The head of the FMB would also like to see the Government ease planning red tape, make fresh investment funds available and free up additional land for the development of much needed new homes, which could go a long way towards helping developers build the 250,000 new homes the UK needs every year to just to keep pace with demand, never mind bringing us out of the recession.

New figures from the National House Building Council (NHBC) show that the overall level of residential property building fell in 2012 with just 104,510 new homes registered during 2012; a 9% fall on 114,930 new homes in 2011.

The fall was entirely contributable to public sector housing registrations which dropped from 36,680 in 2011, to 26,390 in 2012.

Richard Tamayo, Commercial Director at NHBC, said, “In summary 2012 was a challenging year for the house building industry overall but ended on an encouraging note with Q4 figures 17% up on the same period for 2011. With Government-backed schemes such as NewBuy and Funding for Lending helping to increase mortgage availability, there are reasons to believe that 2013 may see the industry able to build on some of the positive momentum we saw towards the end of 2012, which does seem to be carrying over into January. Nonetheless, with house-building volumes so far below the numbers desperately needed in the UK, this is clearly an issue that needs to remain at the heart of Government policy.”

New residential property prices also remained fairly flat in 2012, rising by just 1.1% throughout the whole of last year.

The average price of a new home in December was £229,571 (GBP), down 0.8% over the month. A relatively flat last quarter for the new residential property market was bolstered by strong price growth at the beginning of the year, resulting in the overall property price rise.

Steven Lees, Director of SmartNewHomes, said, “Strong and sustained demand for new homes, particularly from first time buyers eager to take advantage of the shared equity schemes available from house builders and the Government, meant that prices fluctuated by only £10,000 across the year. This compares to £22,000 in the wider market.”

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