UK housing
There were 36,450 housing starts made in the first three months of 2014 Reuters

House building in the UK is rapidly on the rise amid the economic recovery.

Figures published by the Department for Communities and Local Government (DCLG) show that in the opening three months of 2014 there were 36,450 housing starts, up by 11% on the previous quarter and 31% on the same period a year before.

Construction firms have reacted to the revival in demand in the housing market as the UK economic recovery strengthens, leaving people better off, and waves of support to make mortgages cheaper.

But the pace of house building continues to fall well short of what is needed to keep up with demand. The government's own National Housing and Planning Advice Unit says the UK needs 290,500 new homes a year until 2031.

Demand has been fuelled by improving consumer confidence and household finances, with the UK economy set to grow by 3.4% in 2014 according to the Bank of England.

And interest rates are ultra-low as the Bank of England holds its benchmark rate at 0.5%, the all-time-low at which it has sat since 2009 to keep the cost of credit – such as mortgages – down.

In a further boost for demand, the government has made mortgages cheaper and easier to access through its Help to Buy scheme.

As a result of the surging demand and a constrained supply, house prices are soaring. Nationwide said in its monthly index that the average price of a UK home had hit £183,577 in April, a 10.9% leap over the year.

Construction firms are now chasing profits from higher house prices. But they are encountering supply side issues, such as a shortage of labour and materials.

In the years after the financial crisis, as the government embarked on its austerity programme of spending cuts, construction sector output collapsed because public contracts dried up.

Now the healing housing market is sparking a sharp increase in construction work. Because the supply side of the industry was heavily damaged by the recent collapse, it is struggling to rebuild itself and keep up with the volume of new work.

"In 2010 we inherited a situation where builders couldn't build, buyers couldn't buy and lenders wouldn't lend," said UK Communities Secretary Eric Pickles.

"Today's figures show we're turning this around, with Help to Buy not only helping aspiring homeowners but also leading to a resurgence in house building.

"Thanks to this and the reinvigorated Right to Buy, we're ensuring anyone who works hard and wants to get on the property ladder will be able to do so."