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UK home building hits highest since 2007 but still lags demand
January 31, 2014 / 12:05 AM / in 4 years

UK home building hits highest since 2007 but still lags demand

LONDON, Jan 31 (Reuters) - New-home building in Britain last year hit its highest level since the financial crisis but remains far too low to meet a strong recovery in demand, an industry report showed on Friday.

New home registrations in the UK increased by 28 percent in 2013 to 133,670, the highest number since 2007, according to data from the National House Building Council. Falling unemployment, low interest rates and government programmes have helped spur a housing recovery.

But a mismatch between demand for homes and the number of properties coming on the market has pushed up house valuations and priced some people out of the property market, despite government programs to get them on the housing ladder.

“Over the year, we have seen a genuine return of confidence to the industry as builders strive to meet the growing demand for new homes that the United Kingdom clearly needs,” NHBC Chief Executive Mike Quinton said.

“As we have stressed throughout the recent upturn, this recovery has been from a historically low base. The UK still has a chronic shortage of new homes.”

Brian Hilliard, the chief UK economist at Societe Generale said concern about supply was likely to persist for a while. “Just because construction is responding to this increase in demand, it’s only a very partial response and it’s got a long long way to go,” he said.

A government-backed review of the housing market in 2004 estimated that Britain needed to build 250,000 homes a year.

The government began its ‘Help to Buy’ programme last year, originally to encourage the purchase of new properties. It then expanded the scheme to provide state guarantees for low-deposit mortgages.

Concern about the strength of the housing market prompted the Bank of England and the government to say in November that it would stop encouraging banks to lend to home buyers under the separate Funding for Lending Scheme.

“There are some inherent contradictions in the overall policy stance looking at both the Treasury and the Bank of England together,” Societe Generale’s Hilliard said.

The NHBC said most UK regions saw registrations of new homes rise in 2013 but London stood out, in keeping with other surveys. The number of new homes registered in the capital last year jumped 60 percent to 26,230 from 2012, reaching its highest since electronic records began over 26 years ago.

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