Property: Housebuilding slumps in credit crunch
House building falls by a quarter
Thursday, 15 May 2008 11:40
New house building in England fell by almost a quarter over the last three months, placing the government's target of two million new homes by 2016 at risk.
The latest government statistics show the number of new builds begun between January and March declined 24 per cent compared to last year, while housing completions fell 18 per cent.
David Stubbs, Royal Institute of Chartered Surveyors (Rics) senior economist said: "Today’s figures show house building firms dramatically reducing the number of properties they are starting to build in response to a weak market and excess inventories of unsold homes.
"Given the on-going problems in the mortgage market and a weakening economy, the decline in house building will surely continue. This promises to makes the government's pledge to build three million homes by 2020 a difficult one to keep."
Annual housing start figures for England continued to decline, the figures show. They totalled 156,400 in 2007-08, down by ten per cent compared with 2006-07 and almost 18 per cent below their 2005-06 peak.
Completions exceeded starts in 2007-08 for the first time since 1992-93, the report said.
A spokesperson from the National Housing Federation (NHF), which represents housing associations to provide affordable housing, said: "I think it is going to be difficult and the government is going to have to be careful if it is going to meet its target for social homes."
The NHF also said that social housing is crucial at a time of high housing prices, as people are struggling to get on the housing ladder.
"Overall it is a tough, challenging time, which housing associations will hopefully be able to ride out," the spokesperson added.
The Home Builders Federation (HBF), the industry's trade body, is calling on the government to assist the market.
Stewart Baseley, executive chairman of the HBF said: "We need action now to prevent widespread redundancies in the housing industry."
The housing market has slumped as buyers find getting a mortgage harder and property prices have started to fall.
Gordon Brown announced plans to help the market yesterday, after his housing minister Caroline Flint inadvertently revealed government fears that prices will fall by ten per cent this year.
Sarah Routledge