Building on a rise in confidence

But such cynicism is beginning to look out of place. No-one, George Osborne included, is calling this a satisfactory economic recovery – there is "still a long way to go". Nevertheless, last week's accumulation of small upward steps included a 0.6% rise in second-quarter GDP in the UK, and a 2.5% rise in manufactured exports in Scotland in the last three months. The latter was seized on by Finance Secretary John Swinney as "another positive piece of evidence that Scotland is on the road to economic recovery".

New figures from the British Bankers' Association showed mortgage approvals up 33% in June compared with the same month last year, while HMRC revealed a pick-up in actual house sales.

Given the output multiplier effects of construction and housebuilding sector, there was also cause for cheer in a lower-profile statistic, from the Royal Institute of Chartered Surveyors Scotland (RICS). With 11,000 members spanning the entire industry, from international mega-contractors to local "one-man bands", RICS prides itself on being the best gauge of industry sentiment.

It reported an 11% rise in surveyors reporting increased workloads, with 33% of respondents predicting workloads continuing to rise, and 22% more chartered surveyors expecting job opportunities within the industry to rise in the next 12 months – their most positive reading since the first quarter of 2008.

While construction output remains 16.5% below its pre-crash highs, it matters that housebuilders – who have seen completions halve during the recession – are sounding positive about improved profitability, even if against what Philip Hogg, chief executive of industry body Homes for Scotland, stresses is an "incredibly low base",

Fewer than 15,000 new homes were built in Scotland in 2012, the lowest level since 1947. Scotland will need around 465,000 new homes by 2035, and at the present rate we are heading for a shortfall of around 140,000, a dire statistic signifying unhoused families, under-productive businesses and unfulfilled, untrained apprentice builders.

Homes for Scotland believes that employment in housebuilding has halved along with output – one of the most severe industrial reverses in Scotland's history. Unlike former iconic industries such as shipbuilding and jute weaving, housebuilding will recover, but only slowly. Employers will hesitate before adding significantly to head counts, in case this dawn is a false one.

The industry body also revealed last week that it is commissioning new research into the full impact of the banking crisis on housebuilders, looking at how best to nurture the sector's recovery.

Against this background, signs of improvement are worth celebrating – even if it is qualified as the industry "beginning to regain composure" rather than anything close to a return to form.

Andrew Mickel, director of Mactaggart & Mickel Homes, told the Sunday Herald that his company was going "full steam ahead" after a steady flow of new buyers "reserving" new builds after they opened new sites in Eaglesham (129 units), Dalkeith (100) and Dollar (22).

"If we didn't think there was momentum in the economy we wouldn't be opening these sites," Mickel said.

"There is more confidence about, people are feeling more settled in their jobs. We're not getting ahead of ourselves, but it does feel like the tectonic plates are shifting positively, and many housebuilders are looking for new land to buy."

Brian McQuade, managing director of Kier Construction's Scottish arm, has welcomed the growth in the construction sector announced in last week's GDP figures, saying that it marked a "small but important step in the right direction".

Referring to the news that construction had grown by 0.9% in the second quarter of 2013, McQuade said: "These figures are borne out by our securing significant new contracts in Scotland in recent months. And while the national figures show just a small increase, there is cautious optimism within the construction industry as a whole."

While Osborne was careful not to be seen to be claiming any credit for the better-than-expected GDP rise, housebuilding is one area where Coalition policy is being credited with lessening the financial barriers that stand in the way of a housing recovery. Controversial when announced, the UK Government's Help to Buy scheme has the firm approval of the construction industry. The second phase, covering all homes under £600,000, was launched last week.

To some, concerns about Help to Buy inflating a new bubble are akin to denying brandy to a patient suffering from shock out of fears they might become alcoholic. Equally, the fears that it would distort the market seemed "political" rather than genuine, according to Hogg. New-build housing represents only 10% of the total market. "Nobody wants to go back to the days of 120% mortgages," he says, "we just need realistic loans for people who can sustainably afford to pay them back."

Backed by £3.5 billion of stimulus, Help to Buy enables all purchasers, not just first-time buyers, to put down a 5% deposit on a new-build home – much less than most banks now demand – with up to 20% of the cost of the home funded by a shared-equity loan, linked to the property's value but interest-free for the first five years.

Available only in England, it will be supplemented in January 2014 with a UK-wide mortgage guarantee, where the Government will back part of a mortgage.

"The market down south is already benefiting significantly from the Help to Buy scheme," said Hogg. "There have been 7000 reservations in the first three months of the scheme, since it launched in April. We don't have access to that scheme as housing is devolved, but we have been working with the Scottish Government to explain why we need similar support, and Nicola Sturgeon announced a similar scheme in May.

"The scheme has already had a dramatic effect on activity in England and we in Scotland are already in catch-up mode. It does provoke questions about why Scotland didn't think of doing this earlier. In England they had a scheme called FirstBuy, which could be adapted more quickly, but First Buy was never launched in Scotland as our shared-equity schemes have been targeted in a different way.

"The UK Government's scheme is a very useful blueprint, we can see it's been effective and believe it could be equally effective in Scotland."

RICS chief executive Sarah Speirs agrees that the Scottish Government is "running to catch up" with the UK scheme. "We're still light on the detail and don't know how it's going to work, but a package of measures that will help people to buy is positive and is to be welcomed."

The Scottish plan, details of which will be announced in the next few months, will make available £120 million in help for would-be buyers, part of a £290.8m of restricted loan and equity investment funding to the Scottish Government announced by the Chancellor in the March Budget. Revealing ongoing work with "stakeholders" on the scheme at Homes for Scotland's May conference, Deputy First Minister Nicola Sturgeon said the funding would "not only help people to buy their first home, they will also help 'second-steppers' to sell their home and to move to another property".

She added: "This is not only about helping people to buy houses. Our actions are also stimulating the economy. By supporting house buying and construction, we are creating new work for the sector and supporting jobs."

Given the political need to show that it is making a real contribution to the recovery, while expending resources on promoting constitutional change, the Scottish Government is under pressure to do more to stimulate not just the demand for new homes but also the supply. Here, its claims to be on the case are best supported by the ongoing work to improve the performance of the planning system, led by Local Government Minister Derek Mackay MSP.

Perhaps in response to the widely held view that – despite much improvement – Scotland still lacks a planning system that is universally recognised as being part of the solution as opposed to part of the problem, Mackay has been touring the country (he was in Orkney and Shetland last week) "outlining his personal vision for the planning service [and] supporting improvements".

New legislation which came into force last month consolidates improvements to regulations on development management, appeals, and devolution of decision-making on contested cases.

Also of potential significance to the speed of Scotland's housing recovery is the work being done to reform procurement in the construction industry – the formalities by which contracts are awarded, an area that has been allowed over the decades to become bureaucratic and wasteful.

When John McClelland conducted his 2006 review of Scottish procurement, he gave the building industry a wide berth, the sector being so intractably complex as to deserve a review of its own. Seven years later, this is finally taking place, under experienced construction and forensic accountancy experts, Robin Crawford and Ken Lewandowski.

Commissioned last October, their report is based on around 120 interviews with industry players and is due "by the end of the summer". It will include recommendations for improving the system. Crawford told the Sunday Herald: "The sustainability of the construction sector, particularly in rural areas, is the lodestone of all of our work."

He added: "We are keen on promoting procurement practices that promote effective and efficient procurement that helps us achieve the best infrastructure for Scotland and helps the industry. We don't think these two aims are incompatible."

Crawford also hinted that his "plain-speaking and realistic" report will be as harsh on some of the bad practices of the construction sector as it is on the inefficient practices of their public-sector clients. For example, it is likely to come down hard on the widespread practice of withholding payment to sub-contractors – an issue previously highlighted by the Sunday Herald. He will not be recommending the formation of a new procurement quango, or a committee to be formed to study the findings of the report, believing that there is already sufficient expertise in the existing structures.

In his view, making it easier to build Scotland's future – literally rather than rhetorically – is mostly a matter of better organisation and better focus.

Green shoots are finally coming through in construction, boosted by a rise in mortgage lending and Government schemes to help buyers. By Business Editor Colin Donald