George Osborne unveiled fresh measures to stimulate housing in the Autumn Statement that could see 10,000 more affordable homes built.
He also said the Government would issue £1bn in loans to unblock housing developments, supporting building of an estimated 250,000 new homes over the next six years.
He said: “If we want more people to own a home, we have to build more homes. “And the Office of Budget Responsibility is absolutely right today to draw attention to the weakness of housing supply in this country.
“The good news is the latest survey data showed residential construction growing at its fastest rate for a decade.
“And our hard-won planning reforms are delivering a 35% increase in approvals for new homes.”
A key part of the new impetus is lifting the borrowing limits for councils to help them boost the supply of housing.
The government will increase local authority Housing Revenue Account borrowing limits by £150m in 2015-16 and £150m in 2016-17.
It forecasts this could support around 10,000 new affordable homes if used.
The government will also issue £1bn in loans to unblock large housing developments. The first will help delivery in Manchester and Leeds before being offered across the rest of the country.
Overall the six-year programme is expected to support the development of up to 250,000 homes.
The government will consult on a new 10 unit threshold for section 106 affordable housing contributions to reduce costs for smaller builders.
The Scottish government says it is still on target to deliver 30,000 new affordable homes by 2016, having seen 16,000 built since 2011.
But latest Scottish Government housing figures show the picture is not as bright for private housing with starts and completions down on a year ago.
Private sector starts in the 12 months to the end of June were 11% lower than last year at 9,538.
Conversely social sector starts edged up 2%to 3,386 at the end of September 2013, compared to the same 12 months in the previous year.
For the year ending June, total new build starts fell 8% to 12,897, while completions were down 14% at 13,478.
Housing Minister Margaret Burgess said:“Today’s statistics show we are on track to delivering our commitment of 30,000 affordable homes during the lifetime of this Parliament.
However they also underline the continued negative impact that challenging global economic conditions and Westminster’s cuts to our capital budget have had on house building activity in Scotland.
“For this Government housing is and will remain a priority. We have boosted our budgets for new affordable homes considerably and in the three year period between April 2012 to March 2015 plan to invest £970 million in affordable housing.
This will increase the supply of affordable homes and deliver vital support for construction and house building companies throughout Scotland.
“We are doing all we can to facilitate the industry’s recovery, deliver more affordable homes for people across Scotland and protect and create jobs.
“In particular, our Help to Buy (Scotland) shared equity scheme and our support for MI New Home is helping households get onto or move up the property ladder, whilst our National Housing Trust initiative and House-building Infrastructure Loan Fund are also supporting the construction of much needed new homes.”
There has been a sharp increase in the number of new home planning approvals granted in the third quarter of the year.
According to the latest Home Builders Federation report planning permissions jumped 31% to 44,251 permissions in England year on year and were up 19% on the preceding quarter.
This equates to 826 sites coming on stream in the future, the highest pipeline of projects since the 2008 peak.
The new homes planning figures, compiled by information specialist Glenigan, are the latest positive indicators to emerge for the sector.
Last week official Government statistics showed the number of private sector new homes started in England in the third quarter was up 29% year-on-year.
While new home warranty provider NHBC reported registrations of new homes in the same quarter were 19% up on last year.
Glenigan’s Allan Wilen said: “The latest quarterly rise in planning approvals bodes well for 2014, indicating that housebuilders are responding to the rising demand from house purchasers, which is in part supported by the Help to Buy scheme.
“Furthermore the sharpest rises in planning approvals during the quarter were outside of London and the South East, pointing to a broadly based upturn in new housing market activity and project starts during 2014.”
But the total figure is still well short of the 60,000 permissions required on average per quarter to meet the country’s level of housing need.
House builders are also complaining that many residential planning permissions come with long lists of ‘conditions’ that local authorities then take a long time to clear, delaying work starting on new sites.
Stewart Baseley, Executive Chairman of the HBF, said:“If we are to see the required increase in supply continue we need to see all local authorities playing their part. Increasingly we are seeing onerous conditions being attached to permissions that unnecessarily delay work starting on new sites.
“There are now tens of thousands of plots with permission but which house builders cannot start.
“This is a situation that Local Government - and ministers - need to urgently address if we are to see recent home building increases sustained.”
New home registrations jumped 24% in the three months from August to October compared to the same time last year, according to latest NHBC figures.
The number of new homes registered in the UK rose to 32,716 new homes during this period, compared to 26,440 in 2012.
In the month of October alone 12,682 homes were registered, nearly a third up on last October’s overall total of 9,680.
NHBC Commercial Director Richard Tamayo, said: “Throughout 2013 we have seen a sustained increase in registrations compared to last year, with this year set to produce the largest number of new homes since 2007.
“There is little doubt that Government schemes, such as Help to Buy, have contributed to the growth seen throughout 2013, whilst Labour’s announcement last week shows that the housing deficit across the UK remains high on the agenda from a political perspective.
“However, many independent commentators feel that although the target to build 200,000 new homes a year is ambitious, it may still not be enough to meet the growing housing needs of the population.”
Meanwhile prices of houses and flats have picked up strongly, according to latest figures from the UK's second largest mortgage lender.
The Nationwide building society said house prices are now rising at 6.5% a year, up from 5.8% a month ago.
On a monthly basis, prices increased by 0.6% during November, slightly slower than in October, when prices rose by 1% in one month alone.
It said the average price of a house or flat in the UK is £174,566, the highest since April 2008.
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