New homes become latest victim of credit crunch

Thursday, 24 January 2008 12:00

The slowing housing market is having a knock-on effect on the numbers of new homes being built, prompting fears government targets will not be met.

That is verdict of the Royal Institution of Chartered Surveyors (Rics) which has unearthed evidence of "dampening confidence" in the construction industry.

Its latest survey figures show growth in construction workloads eased back in the fourth quarter as housebuilders and business felt the effects of the credit crunch and demand for housing reduced.

During that period, from October to December, 16 per cent more chartered surveyors reported a rise in construction workloads, compared with 17 per cent in the previous quarter.

Surveyors are also predicting below-average profit margins.

It will come as a further blow to many first-time buyers who often rely on new-build projects - which by law must include a proportion of affordable properties - as their only way of moving on to the housing ladder.

It shows how economic uncertainty is hitting all corners of the property market and Rics suggests the government's target of building two million new homes by 2016 and three million by 2020 - including ten eco-town - will not by met.

David Stubbs, Rics senior economist, said: "A slowing housing and commercial property market, following the credit crunch and the Northern Rock turmoil, have started to hit the construction sector.

"Doubts are likely to intensify over the ability of the government to meet its ambitious housebuilding targets," he added.

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