George Osborne's plan to boost the supply of new homes appeared to gain traction last month after a survey of the construction industry showed housebuilding increased at its fastest pace since June 2010.
While all areas of construction increased in July, housebuilding led the way with a sixth straight month of increased activity. Analysts said the market for new homes was showing renewed vigour after a slump following the financial crash that was deeper and longer than any other sector of the economy.
The Treasury is expected to cheer the survey results, which follow a concerted effort to ease credit conditions and lower interest rates to support first time buyers.
The latest Markit/CIPS UK Construction Purchasing Managers' Index (PMI) also signalled " a solid increase in construction employment levels and the strongest degree of positive sentiment about future output since May 2010."
The index jumped to 57 from 51.0 in June, where a figure above 50 indicates expansion.
The Bank of England's Funding for Lending scheme started last year and the chancellor's Help to Buy scheme, which kicked off earlier this year, have been cited by housebuilders as a key reason for a rise in demand for new homes.
But there are still concerns in the industry that prices will race ahead of the industry's capacity to complete homes, driving up prices.
Help to Buy, which underwrites the deposits of homebuyers, has proved especially controversial. Some economists have called it "crazy" and accused the government of attempting to create a house price feelgood factor ahead of the 2015 election.
A survey by Nationwide showed average UK prices nudged up 0.8% month on month in July, with many analysts saying house price inflation could be double the CPI measure of all goods and services of 2.9% by the end of the year.
Newedge Strategy said the house prices survey "consolidates the idea that the UK housing market is gaining momentum, also supported by the BoE and government incentives to support the credit market".
The construction industry more broadly indicated that the rebound in output levels indicated during the second quarter of 2013 was maintained into July.
Tim Moore, senior economist at Markit, said: "July's survey highlights a new wave of optimism across the UK construction sector, with companies reporting a pace of expansion in excess of anything seen over the past three years.
The swing back to output growth broadened to include commercial and civil engineering activity during July, although housing construction remains the one thing crucial to the sector's strong upturn at present.
"Construction firms saw the fastest improvement in new orders for over a year, which helped kick-start job creation and input buying growth during July.
A switch to sharply rising purchasing activity may have caught some suppliers by surprise, as delivery times lengthened to the greatest degree in over seven years."
theguardian.com
While all areas of construction increased in July, housebuilding led the way with a sixth straight month of increased activity. Analysts said the market for new homes was showing renewed vigour after a slump following the financial crash that was deeper and longer than any other sector of the economy.
The Treasury is expected to cheer the survey results, which follow a concerted effort to ease credit conditions and lower interest rates to support first time buyers.
The latest Markit/CIPS UK Construction Purchasing Managers' Index (PMI) also signalled " a solid increase in construction employment levels and the strongest degree of positive sentiment about future output since May 2010."
The index jumped to 57 from 51.0 in June, where a figure above 50 indicates expansion.
The Bank of England's Funding for Lending scheme started last year and the chancellor's Help to Buy scheme, which kicked off earlier this year, have been cited by housebuilders as a key reason for a rise in demand for new homes.
But there are still concerns in the industry that prices will race ahead of the industry's capacity to complete homes, driving up prices.
Help to Buy, which underwrites the deposits of homebuyers, has proved especially controversial. Some economists have called it "crazy" and accused the government of attempting to create a house price feelgood factor ahead of the 2015 election.
A survey by Nationwide showed average UK prices nudged up 0.8% month on month in July, with many analysts saying house price inflation could be double the CPI measure of all goods and services of 2.9% by the end of the year.
Newedge Strategy said the house prices survey "consolidates the idea that the UK housing market is gaining momentum, also supported by the BoE and government incentives to support the credit market".
The construction industry more broadly indicated that the rebound in output levels indicated during the second quarter of 2013 was maintained into July.
Tim Moore, senior economist at Markit, said: "July's survey highlights a new wave of optimism across the UK construction sector, with companies reporting a pace of expansion in excess of anything seen over the past three years.
The swing back to output growth broadened to include commercial and civil engineering activity during July, although housing construction remains the one thing crucial to the sector's strong upturn at present.
"Construction firms saw the fastest improvement in new orders for over a year, which helped kick-start job creation and input buying growth during July.
A switch to sharply rising purchasing activity may have caught some suppliers by surprise, as delivery times lengthened to the greatest degree in over seven years."
theguardian.com
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