Number of new homes being built at highest level for two years

The number of new homes being built in England rose to its highest level for nearly two years during the first quarter of 2010, figures showed today.

Around 24,930 properties were started in the three months to the end of March, a level last seen during the second quarter of 2008, according to Communities and Local Government.

But despite housing starts being 62% above their low point seen in the first quarter of 2009, they were still running at half the level they reached when the market peaked in 2007.

The rise was driven by private developers, who started 16% more properties during the period than in the previous three months.

The number of homes being built by registered social landlords remained broadly unchanged.

Housebuilders have been hit hard by the combination of the credit crunch and the housing market correction, causing them to mothball existing sites and put future developments on hold.

The number of new homes built fell to its lowest level since the Second World War during 2009.

But the sector has been showing signs of recovering, as house prices rise again and buyers return to the market, with housebuilders recently reporting some upbeat trading statements.

The number of properties completed during the first three months of the year fell for the ninth consecutive quarter, dropping by 6% to 26,090.

Within the total, private housebuilders completed 8% fewer properties, while building levels among housing associations rose by 3%.

A total of 113,420 new homes were finished in the year to the end of March, 15% fewer than during the previous 12 months and less than half the 240,000 new homes it is thought need to be built each year if supply is to keep pace with demand.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said: "The rebound in housing starts is consistent with the better tone evident in the latest RICS Construction Survey.

"This also showed housing workloads on the rise although, significantly, the expectations series suggests that further increases in output are likely to be relatively modest.

"The lack of mortgage finance for first-time buyers coupled with a shortage of development finance are two key factors holding back a more meaningful recovery in residential construction."

The group said it expected only around 120,000 new homes to be started during the whole of 2010.

It added that although this was above the previous year's figure of 80,000, it was still well down on the 170,000 housing starts which were typically seen each year during the middle part of the past decade.

The number of homes being built were higher in all regions of England during the first quarter than they had been during the previous three months, with the North West leading the way, followed by Yorkshire and the Humber and the South East.

But the number of completions fell in all areas except the North East and East Midlands during the same period.