Liz Peace, chief executive of the British Property Federation, said: "These are encouraging results and illustrate just how important a vibrant construction industry is to the overall UK economy.
"During the past two quarters the construction industry has posted strong economic growth for the first time in three years. It is vital for the UK that it is allowed to maintain that momentum."
The BPF warned that the construction sector could be held back if ministers do not move quickly to introduce some form of Tax Increment Financing (TIF), a method of forward funding infrastructure, which last week received backing in George Osborne's Comprehensive Spending Review.
The BPF says TIF is seen as vital to unlocking new development. A council can borrow money to fund new projects and so allow wider development schemes to go ahead, and collect the extra business rates generated by the development to pay back the loan over a set period of time.
Council-funded TIF would require legislation that may not be introduced until next year but in the meantime developer-funded TIFs, which would see the private sector take on all of the development risk, could be launched sooner with Treasury backing, said the BPF.
Peace added: "At a time when few regeneration projects are viable, TIF offers one of the best prospects for providing the upfront funding of essential infrastructure that is needed to attract vital new investment from the private sector, and by doing so securing further growth in the construction industry as it continues to support the UK economy out of recession."
