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Housebuilding industry concerned about life after help to buy

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Housebuilding industry concerned about life after help to buy

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Published by Jon Land for 24dash.com in Housing and also in Central Government

Housebuilding industry concerned about life after help to buy Housebuilding industry concerned about life after help to buy

Strong housebuilding growth has been artificially stimulated by the government's help to buy scheme but "strong concerns" have been expressed about what happens after 2015, according to a new report.

Despite the ongoing need for all types of new housing and a growth forecast of 3.4% for this year, the Construction Products Association (CPA) has questioned the long-term sustainability of the recovery and predicts a dip in housebuilding levels post-2015.

Dr Noble Francis, the CPA's economics director of the association, said: “The construction industry is in a very different place to just one year earlier, when output fell to a level 15.4% below its pre-recession peak. Since 2013 Q1, activity has picked up considerably.

“Private housing has seen a rapid recovery, albeit from levels of house building that are half the number needed to meet the number of households created. This private housing growth has been driven by wider economic recovery and government’s help to buy policy. While initial concerns were that this policy would fuel house price inflation, but clearly both house prices and house building have risen significantly. Housing starts in Great Britain during 2013 are estimated to have increased 24.0% and further growth rates of 16.0% in 2014 and 10.0% in 2015 are forecast.

“After 2015, without help to buy to support housing market demand, there are strong concerns about whether housebuilding will continue to improve despite the clear need for new housing. As a consequence, the Association’s forecasts anticipate the growth in private housing starts slowing in 2016."

Other key points in the forecasts include:

  • Private housing repair, maintenance and improvement is expected to grow 3.5% in 2014 and then 4.0% per year until 2017; 
  • Public housing starts to rise 2.0% in 2014 and 2015 before marginal growth thereafter with government focusing on affordable, not social, housing provision.

Meanwhile, a new report has warned that the housebuilding revival is being hampered by a shortage of key skills and materials.

More than a third of respondents to a RICS survey claim that labour shortages are restricting building. Skills shortages are increasing across all of the trades but bricklayers remain particularly scarce due to strong demand from the housing sector.

A higher percentage of respondents are now reporting problems sourcing relevant skills than at any time since mid-2006.

During the final three months of the year, almost 40% of respondents also claimed that a scarcity of materials is limiting activity with surveyors noting that bricks and concrete blocks, in particular, are in short supply.

Alan Muse, RICS Director of Built Environment, said: “With the economy having turned a corner in recent months, it would seem that the construction industry has followed suit and activity is up right across the country. More homes are being built, infrastructure is being upgraded and each part of the UK is benefiting from this more positive picture.

"However, with recent estimates stating that over 230,000 new homes need to be built just to keep up with population growth, further initiatives from the government will be necessary to get close to this target.”

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