(1888PressRelease)
May 17, 2008 - The number of new-build properties started in the last three months has seen a 24% drop, according to new figures from the Office of National Statistics (ONS). The annual figures for new-builds showed a total of 156,400 in 2007-08, down 10% compared with the previous year and almost 18% lower than their peak in 2005-06.
This continuing decline will seriously undermine the government’s pledge to provide affordable housing and places in jeopardy its target of creating 2 million new homes by 2016.
The report showed that over the past year, the number of properties completed exceeded the number of starts (new builds started in the last three months or so) for the first time since 1992-93.
The ONS said that demand for new construction fell from £8.3 billion in the last quarter of 2007 to £7.7 billion in the first quarter of this year.
In response to the weak housing market and the large numbers of unsold stock, property construction companies are drastically reducing the number of homes they are starting to build, which can also have knock-on effects on the wider economy and the employment picture. In late April the building firm Persimmon announced that company profits had fallen 24% and consequently it was suspending all new building work. Other construction firms similarly reported falls in sales.
At a time when conditions are very tough for those trying to obtain mortgages or get a foot on the property ladder, the need for affordable social housing is even greater. But with fewer new builds available, housing associations are finding their role in providing such housing increasingly difficult.
The Home Builder’s Federation (HBF), the industry’s trade organization, is asking the government to help the floundering market, warning of large-scale redundancies in the housing industry.
The shrinking of the new-build sector reflects the serious repercussions of the credit crunch, leading banks and building societies to raise the rates on their most popular mortgages (while withdrawing many others), tighten lending criteria and demand larger deposits. “The drop in mortgage approvals in recent months, especially for first-time buyers, is the reason for the dramatic drop in demand for new houses,” said Lawrence Smith of Decision Homebuyers, “and until market conditions improve, there is little incentive for construction companies to keep building them”.
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Decision Homebuyers carries out daily surveys of the national media to provide up-to-date news and commentary on the UK property market.
For press enquiries, please contact Phil Rendall on 020 7099 9026
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