ECONOMIC NEWS 15 JUNE 2015
At the end of May, the Queen’s Speech confirmed that a new Housing Bill will be introduced, which will support home ownership and extend the ‘Right to Buy’ to 1.3 million housing association tenants. It will also introduce ‘sweeping new measures’ including a ‘Right to Build’, which will give people ‘the right to be allocated land with planning permission for them to self-build or commission a local builder to build a home.’
Meanwhile, research carried out on behalf of BBC Radio 4’s File on 4 programme by Glenigan, a leading provider of construction data, says that the number of new homes being approved on greenbelt land in England has increased five-fold in the last five years from 2,258 in 2009/10 to 11,977 in 2014/15. Another survey for the programme by Natural England has reported that 37 per cent of local planning authorities had housing allocations in or around Areas of Outstanding Natural Beauty (AONBs).
The latest data on mortgages from the Bank of England shows that approvals in April increased to their highest level for 14 months. The numbers rose by 10 per cent from March to a total of 68,706 in April, the biggest month-on-month increase since 2009. Nevertheless, this is way below the peak reached in November 2006 of 129,996. Although tight strictures are in place on lending, a strong labour market and record low mortgage rates are still supporting the market.
The Office of National Statistics (ONS) reported that overall construction output in April fell by 0.8 per cent, reversing March’s 1.4 per cent increase, but new housing projects contributed to a 1.6 per cent increase in all new work during the month. May output figures from The Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) showed a slight rebound in construction, chiefly driven by a ‘sharp but accelerated increase in residential building activity’. Markit also reported a growth in new work, which was attributed by survey respondents to improved underlying client confidence following the General Election.
The ONS has recently revised its methodology for measuring construction and now says that output fell by only 0.2 per cent in the first quarter of the year, rather than by 1.1 per cent as previously thought. While construction accounts for only 6.4 per cent of Britain’s economic output compared to the service sector’s 77 per cent, the ONS revision could bump up the overall economic growth for the quarter to 0.4 per cent, rather than 0.3 per cent as forecast in April.
A recent survey of more than 800 companies by The Confederation of British Industry (CBI) suggested that all sectors of the economy are growing. The main driver of the acceleration is the services sector, which recorded its fastest growth in business volumes since February 2006.