New home building drops by half

Friday, 21 November 2008 10:34

The number of new homes being started has fallen by 48 per cent in the last year.

Data from the Department for Communities and Local Government (DCLG) show 22,200 homes were started in the third quarter of 2008.

This was 48 per cent down on a year ago and 33 per cent down on the previous quarter.

The figures show how the credit crunch has hit the construction industry - as funding for developments is cut off and demand from buyers falls.

The number home finished was down ten per cent from the previous quarter to an estimated 33,300.

The slowdown places further pressure on the government's target of 240,000 new homes per year by 2016

There has also been criticism on the government's dependence on the private sector to meet these targets.

It is hoped the pre-Budget report next week will see cash fast tracked into new home building as a way to save the construction industry from collapse.

James Rowlands, policy officer at the Royal Institution of Chartered Surveyors (Rics), said: "Today's disastrous figures show the serious impact the economic downturn is having on the housebuilding industry.

"New starts are likely to amount to little more than 100,000 homes over the whole of this year, with the prospect for 2009 looking even bleaker.

He added: "This decline in housebuilding levels makes the government's target of building 240,000 homes per year by 2016 look even more unrealistic.

"Unless more homes are built there is a real danger of a serious mismatch between demand and supply which could lead to renewed problems of affordability when the market recovers."

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