The Office for National Statistics also revised up July’s output in the construction sector, keeping the sector on track to show growth in the third quarter.
The Government this week launched a mortgage guarantee scheme that it says will encourage more housebuilding by making it easier for aspiring homebuyers to get financing. But critics say all it will do is lift house prices.
Yesterday’s data showed new private housing work rose 1.6 per cent in August from July while other categories of construction such as new public work and private repairs fell, weighing on the headline monthly number.
There was no geographic breakdown for private housing in August but ONS data released earlier this week showed growth in new housing orders in London more than tripled in the second quarter compared with the first three months of the year.
House prices in London have jumped about 10 per cent over the past year, according to previous data.
Output in the construction sector has been volatile but yesterday’s data showed year-on-year growth for a third month in a row, the first time that has happened since May 2011, also boosted by homebuilding, the ONS said.
The yearly four per cent growth in output was the strongest since December 2011. Construction output grew 1.9 per cent in the second quarter from the first three months of the year.
A private sector survey last week suggested that growth in the sector was stronger in the third quarter. The Markit/CIPS construction purchasing managers index hit a near six-year peak in August before slowing slightly in September.
Construction contracted sharply after the financial crisis but has benefited in recent months from a healing economy and government initiatives to inject life into the housing market, such as Help to Buy and Funding for Lending.