Rising house starts fall short of demand
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The Royal Institution of Chartered Surveyors has warned total housing starts for the year will struggle to come in much above 90,000, despite improved figures.
The Communities and Local Government department last week published data showing the number of new properties being built rose for the third quarter in a row with around 25,820 new homes started in England during the three months to the end of September.
This was 18 per cent more than during the previous quarter and 16 per cent higher than in the same period of 2008.
But Simon Rubinsohn, chief economist at RICS, warned the number of new starts was barely a third of what is required over the coming years given likely trends in demography and household formation.
‘The numbers for 2010 should be a little higher although with development finance still constrained, we think it improbable they will reach 130,000 even with a recovery in the wider economy,’ he said.
Mr Rubinsohn said the resulting shortfall in new property coming to the market represented a medium-term time bomb for the housing market, potentially making it even harder for first-time buyers to take that initial step onto the property ladder.
He said: ‘While it is conceivable that the current momentum in the residential market may be arrested as some of the massive policy stimulus is reversed over the next twelve to eighteen months, the danger is that house prices will be squeezed higher by the lack of supply, making property increasingly unaffordable to large sections of the population.’
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