With the air of prosperity continuing unabated in the housing market, surveyors are reporting an in-flux of newly commissioned housing projects across the UK. The Royal Institute of Chartered Surveyors has released results from a survey conducted on new construction activity in the country, and the figures estimate a sharp rise on the second quarter of 2013, with confidence in the market increasing month by month.
During the second quarter of the year, 31 per cent of those taking part in the survey reported significant growth in the new home construction sector. For the third quarter of the year, this figure rose sharply to 41 per cent. This increase is considerable, given that surveyors in every sector of the UK returned confirmation of a rise in house building activity, the first time this has been noted since the pre-credit crunch housing boom.
Earlier this year major surveying firms were struggling to deal with a sudden spike in purchasing activity, with RICS noting that as little as 9000 qualified surveyors were available to service activity. Before 2008 the figure was estimated to be double this number, but many qualified professionals were either laid off due to a shortage of available work or chose to move into alternative employ.
In June this year e.surv and Colleys, two of the UK’s largest surveying firms, were providing minimum estimates on instruction of an appointment of three weeks or more. At this point, firms blamed the lack of qualified individuals and the holiday period to be the reason for the difficulty in dealing with demand, but since the end of September timescales have seemingly become more manageable again as activity naturally wains towards the end of the year.
However, expectation for a strong level of activity in 2014 is high, with the second phase of the Government’s Help to Buy scheme set to have a substantial impact on the market. The chief economist for RICS, Simon Rubinsohn, stated that with this rise in demand, builders and developers will have to work overtime to meet the required levels: “While it’s certainly good news that construction, and especially house building, is finally on the rise right across the UK, we are certainly not out of the woods yet.
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.”
Since activity levels have spiked this summer, the Government and the Bank of England have consistently sought to curb claims from some quarters that their part in trying to stimulate the market will not cause undue destabilisation further down the road. Mark Carney has made several speeches to that effect, noting that the Monetary Policy Committee cannot raise the Base Rate until unemployment rates drop further than current levels.
On a similar vein, Charlie Bean, the deputy governor of the BOE, gave a speech at the Society of Business Economists annual conference, affirming the Bank’s position that a housing bubble is quite unlikely at present, given that current levels of approved mortgages are about half of the level seen pre-credit crunch.
Bean stated that: “It is important to remember that mortgage approvals for house purchase are still running at a little over half their pre-crisis average and, outside London, house price inflation is still quite modest. So we appear to be still some way off seeing an unsustainable house-price boom on the back of excessive credit growth.”
Although resolute on the Bank’s current assessment of the market, Bean did also note that due diligence and care should be taken by the Monetary Policy Committee and the Financial Policy Committee to stave off any future problems occurring due to overly inflated property pricing.
Article By: Simon Butler, Senior Mortgage Consultant at Contractor Mortgages Made Easy
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