English new-home building up 24pc

Construction started on more new homes in England last year than at any point since 2007, government data shows, suggesting that rising house prices and incentives to promote home-building are having some impact on supply.

Work began on 123,010 homes during 2013, a 24 per cent rise on 2012 and one that offers some support for a Bank of England forecast that investment in housing will increase by nearly a quarter this year after slumping during the financial crisis.

Britain's economy showed the fastest growth of any major European economy last year.

However, the expansion relied heavily on consumer spending rather than more durable sources of demand, and came from a lower base than other big economies.

Early in 2013 the government launched a scheme called Help to Buy, which initially gave incentives for people to buy newly built homes, and was later extended to aid the purchase of previously owned properties.

Many economists criticised the scheme when it was launched because it risked doing more to push up prices than to increase construction.

Since then, prices have risen strongly, and are up more than 8 per cent on the year on one measure, with industry experts saying a shortage of homes is largely to blame.

Just 109,670 homes were built in England in 2013, the lowest number since 2010 and a legacy of the small number of housing starts in 2012, which was the lowest since 2009.