The rate of house building has boosted UK construction but will still be short of the 240,000 homes needed each year.
Rising house prices and lower cost mortgage loans have boosted house building resulting in a 2% increase in construction for December last year.
The Office of National Statistics (ONS) has said the construction sector has grown for three consecutive quarters although there was a 4% fall in November.
In the private sector house building increased 5.1% in December and is now up 21.6% over the year which can benefit home movers, first time buyers and buy-to-let investors.
Still a new homes shortfall
The number of new homes completed last year of 104,000 is expected to increase to 167,000 by the year 2018. This figure is still significantly below the estimate needed of 240,000 according to estate agency Savills.
New homes with one and two bedrooms are popular with first time buyers that can afford a typical deposit of 10% to 30% with a mortgage loan from a lender.
Many others are being assisted with the government’s Help to Buy scheme that can enable them to buy a new-build property. Last year about 13,000 home buyers used Help to Buy.
Only a 5% deposit is required from the home buyer with the government offering a 15% equity loan guarantee to the mortgage lender on properties valued up to £600,000.
Help with the deposit for a new home can come from family members as the equity release buyer can access cash using a lifetime mortgage and give to a child or grandchild.
Private developers build the most
Of the total of 104,000 new homes built in 2013 the UK councils accounted for only 1,360.
Private developers provide the bulk of the new-build properties expected to be 91,000 this year rising to 123,000 by 2018, about 74% of the total figure.
After this it is expected that housing associations will build 34,000 and the remaining 10,000 by local authorities.
The rebound in construction is welcomed given the shortage in new homes and increasing demand although this may not be enough to slow the rapid rise in house prices.
The lack of new homes could mean rising house prices for homeowners and remortgage buyers could release capital for home improvements.
What are your next steps?
Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or are a buy-to-let investor.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property to repay an interest only mortgage, pay for care at home or buy a more expensive home.
Learn more by using the property value tracker chart, mortgage monthly cost calculator and equity release calculator. Start with a free mortgage quote or call us and we can take your details.
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