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28th May 2013
The announcement at this year’s budget that the housing sector would receive further government support was met with praise; the extension of mortgage guarantees and the move to make equity loans was seen as a good way to get money into the economy as well as boosting construction activity and jobs in the sector. Initial reports indicate that the first part of the scheme, launched on April 1st has already lead to increased sales at the larger house building firms in a sign that confidence is returning to the sector.
Glenigan data show that starts of private housing projects were strong last year gaining over 30% on the value seen in 2011, however starts began to slow in the final months of 2012 and then turned negative in February this year and continuing to fall to the three months to March, when they were 14% below the level seen in the same period last year. The decline in starts over the first quarter was in part down to the worse than usual weather, but also lending data also indicated that the level of mortgage lending was flat-lining, despite the raft of schemes in place to support it.
Our most recent data on starts for the three months to May show that confidence in the sector appears to have returned, over the period private housing starts were up by 12% compared to the three months to May last year. The data indicate that the strength in starts seen this month continues to be focused on London, the capital saw the largest increase in new projects starting on site, but large gains were also seen in Yorkshire and the Humber and the East of England.
All the signs are pointing to renewed activity in the sector over the coming months, the second and larger part of the Help to Buy scheme will become active next year and we expect project starts to continue to see gains over the next two years.
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