UK housebuilding
UK housebuilding is accelerating, but the supply of new homes is still falling far short of rising demand amid Help to Buy (Reuters) Reuters

The number of housing starts in England accelerated in the third quarter as the UK's economic recovery also picked up pace.

Figures from the Office for National Statistics (ONS) show the number of housing starts in England was 32,230 in the quarter, up 0.8% on the previous three months. Completions were also up, by 5% to 28,850. Housing starts are still 34% below their pre-2007 peak.

An uptick in housebuilding follows months of rising house prices amid a burgeoning economic recovery and a number of mortgage market stimulus schemes, such as Help to Buy and Funding for Lending. However, housing supply is still far outstripped by demand.

"This government inherited the biggest budget deficit in our peacetime history and house building rates that had crashed to their lowest levels since the 1920s," said Kris Hopkins, housing minister.

"We've taken the tough decisions to tackle the deficit, keeping interest rates and repossessions down, and introduced a series of initiatives to help build more affordable homes and give hard-working people a helping hand up the housing ladder.

"Today's figures show we're building at the fastest rate since the crash in 2008, more people are securing a place on the housing ladder, and we're delivering tens of thousands of affordable homes across the whole country."

The government is hoping that Help to Buy, which through lending guarantees and equity loans aims to increase the flow of mortgage credit, triggers a wave of housebuilding.

Critics say without heavy public investment and support on the supply side of the housing market, Help to Buy risks fuelling a house price bubble.

There is also the "Red Tape Challenge" aimed at rooting out unnecessary bureaucracy from the thousands of planning laws construction firms must adhere to and so unblocking any hindered building work.

Shelter the housing charity dismissed the figures and raised concern over housebuilding in the UK.

"What these figures show is that despite the government's claims on Help to Buy, it's failing to deliver the volume of new homes we need," said Campbell Robb, Shelter's chief executive.

"We're building less than half of the 250,000 homes needed each year just to keep up with demand, and the small increase in house building starts is no way near enough to get close to this total.

"Worryingly the number of affordable homes built has fallen significantly, spelling disaster for the thousands of families we see every day who are struggling to cope with soaring housing costs."

Annual housing starts totalled 117,110 in the 12 months to September, a 16% rise.

"Although there has been growth, it is caveated. The housing supply growth in the UK, relative to comparable countries, is very unresponsive to price growth," said Daniel Solomon, economist at the Centre for Economics and Business Research (CEBR), to IBTimes UK.

"Those housing starts are probably a result of anticipated price growth. As we all know, house price growth has accelerated of late. My own view is that's really due to economic fundamentals as opposed to, say, bubble-related factors."