New private housing project starts up 40%

• Latest data from Glenigan points to private housebuilding recovery as underlying value of projects starting on site increased 40% in Q2 2012 compared with Q2 2011
• This followed a 30% year-on-year rise in Q1
• Healthy pipeline: 57% increase in detailed planning approvals in the three months to May
• Developers respond to increased demand from first-time buyers, spurred on by government incentive schemes
• Glenigan forecasts a 29% increase in the underlying value of project starts over 2012, with growth expected to continue through 2013 as the market gains momentum

New data published by construction industry analyst Glenigan today reveals significant year-on-year growth in the underlying value of new private housing project starts in Q1 and Q2 2012, giving a strong indication that confidence is returning to the private housebuilding market.  

According to Glenigan analysis, Q2 2012 saw a 40% increase in the underlying value of private housing project starts relative to Q2 2011. This followed a 30% year-on-year rise in Q1 2012 and illustrates a significant uplift in housebuilding activity after a 3% decline in 2011.

The figures from Glenigan, compiled through comprehensive data collation and exhaustive research, reveal that London and the South East continue to dominate the market having accounted for almost a third of the value of all new private housing schemes starting on site in the first half of 2012.

The housebuilding recovery looks set to continue through 2012 and beyond, as detailed planning approvals for private housing developments surged up 57% in the three months to May compared to the same period a year ago. Glenigan forecasts indicate that the underlying value of project starts will increase by 29% over 2012 as a whole.

Allan Wilén, Economics Director at Glenigan, comments:

“The weak economy and a banking sector that is seemingly loth to lend have constrained the private housing market over the last two years. Capital is still at a premium and banks are charging relatively high prices for access.

“However, developers have cited increased demand from first-time buyers, spurred on by government incentive schemes, as one of the main reasons behind an increase in building. Such measures, combined with historically low interest rates and further liquidity being pumped into the UK economy, have created favourable conditions for first-time buyers, who have historically been the main drivers of the housebuilding sector.

“While the threat of an increase in interest rates and the end of the stamp duty holiday have stymied the market to a certain extent, we expect the sector to continue to grow through 2012 and 2013 as the wider economy begins to recover once more.”