UK Housing Supply Headache Worsens After House Building Work Falls

House building declined in the UK during July, according to official figures, a concern for policymakers working out how to solve the housing crisis.

It will add to the burden already placed on the country's seriously inadequate housing supply, which already cannot cope with a rising population and higher demand from homebuyers amid cheap mortgages and a recovering economy.

The Office for National Statistics (ONS) said the volume of house building dropped by 0.2% in July when compared to June, though it was 30.1% higher than in the same month a year before.

This suggests a leaked government forecast that house building would fall in the year before the general election, by 4% annually to 128,000 housing starts, will come true.

A significant increase in the UK's supply of housing is desperately needed. House building levels are running at around half that needed to meet demand.

The Bank of England has held down the base rate at its all-time-low of 0.5% since 2009, making mortgages cheaper and easier to access. And the UK economy is set to grow by more than 3% in 2014, the fastest rate in the Western world.

Both of these factors have helped increase housing demand, alongside schemes such as Help to Buy which give first-time-buyers a leg up onto the property ladder.

This intense demand set against tight supply has forced up house prices in the UK. The ONS said the average price of a UK home hit £265,000 in June 2014 after leaping 10.2% over the year.

And this problem will only get worse in the long-term unless house building picks up markedly. By 2028, the UK population is expected to soar past the 70 million mark. In 2013, the number was 64.1 million.

In a bid to get construction firms building, the government is enacting a number of measures. It is trying to strip away planning red tape to make it easier for firms to get building permission. And local councils are being forced to pre-approve planning for housing on brownfield sites.

Moreover, the government itself is putting some money into building new public housing, while local authorities have had their borrowing caps lifted to let them take on more debt to build homes.

But critics of the government say this is still not enough and that it must up its direct investment in the building of new homes, particularly social housing, if it wants to tackle the unfolding crisis.