A recent report has suggested that a large proportion of economy growth in the UK during July was largely due to the increase in house building output, which is said to have risen by 2.2% between June and July 2013.
The volatility of the construction industry has previously affected the growth of the UK economy dramatically both positively and negatively. As a result of this, The RICS (Royal Institution of Chartered Surveyors) have led calls for The Royal Bank of Scotland to harbour its strength to limit the year-on-year increase of house prices by 5%, in order to help stabilise the construction industry’s effect on the UK’s GDP - a topic regularly debated across the industry.
According to the BBC, the construction industry accounts for an estimated 6% of the overall national output. The BBC also reports that there was an increase of new orders by 33% in the April – June period compared to last year’s figures.
This news comes at a time where the UK economy seems to be turning a corner. However, many industry professionals remain sceptical over the current banking model which could cause yet another price boom in the housing market due to the lack of a cap on what banks can lend.
The proposed cap by The RICS is designed to act as a ‘speed bump’ rather than a deterrent for individuals looking to enter the housing market, so that they are more aware of the financial implications and risks.
Further growth in the construction industry is estimated in the final third of 2013.