Number of new homes being built down by 19% » Housing » 24dash.com

The number of new homes being built in England has slumped by 19% during the past year, Government figures showed today.

A total of 33,400 new properties were started during the three months to the end of June, 2% more than during the previous quarter, but 19% down on the same period of 2007, according to Communities and Local Government.

The drop in the number of properties being built by private sector developers was even more severe, with these sliding by 27% year-on-year.

But the number of homes being built by registered social landlords has soared by 56% compared with the same three months of 2007, to stand at its highest quarterly level for 11 years.

On an annual basis the number of new homes being started by all builders continued to decline, dropping to 147,500 during the year to the end of June, 12% less than during the previous 12 months and 20% below the peak reached in 2005/2006.

Housebuilders have been hit hard by the problems caused by the credit crunch, with the mortgage famine affecting sales as potential buyers struggle to raise the finance they need to buy a home.

The problems have been particularly acute for first-time buyers, with lenders demanding increasingly high deposits, forcing many people to put plans to get on to the property ladder on hold.

Falling house prices have also led to many housebuilders delaying starting new projects, with the sector shedding about 5,000 jobs.

Housebuilders' share prices have plummeted amid concerns that the firms could breach their banking covenants, while they have also been forced to writedown the value of their land banks.

Persimmon today kicked off what is expected to be a grim results season for the sector, announcing a near two-thirds slide in half-year pre-tax profits.

It added that trading conditions were the most challenging in its recent history, with sales down by nearly a third.

The CLG figures also showed that there was a 9% fall in the number of new homes completed during the second quarter, compared with the first three months of the year, at 36,600 - the lowest figure since the first quarter of 2004.

Completions during the three months were also 13% below figures for the same period of 2007, with completions exceeding starts for the third quarter in a row.

About 161,100 homes were finished in England during the year to the end of June, 4% lower than during the previous 12 months.

On a regional basis the number of new homes started during the second quarter were lower than a year earlier in all areas of the England except London, with particularly large falls seen in the North West, South East, East and Yorkshire and Humberside.

Falling housebuilding levels are putting under threat the Government's target to have 240,000 new homes built each year by 2016.

About 199,200 new properties were built in 2006/2007, but if the current trend in housebuilding continues, net housing supply is expected to fall this year.

A CLG spokesman said: "We recognise that market conditions are currently difficult for housebuilders as a result of the global credit crunch, which is why we are putting measures in place to support industry, including more funding to buy unsold homes and are constantly looking at what more we can do.

"However, a legacy of housing under-supply and our ageing and growing population mean the conditions remain for a healthy housing market over the medium to long term, underpinned by low unemployment and low interest rates.

"Our house building targets are long-term and we remain absolutely committed to increasing supply to respond to the long-term demand for homes from young families and first-time buyers, whilst acknowledging the challenges."

Liberal Democrat Shadow Communities and Local Government Secretary, Julia Goldsworthy said: “With house building hitting rock bottom, this Government’s centralised housing targets are beginning to look like nothing more than a pipe-dream.

“But unreachable targets will not help the thousands of families in unsuitable housing.
 
“This is yet another example of how divorced this Government is from reality.”

Housing charity Shelter called on the Government to immediately inject £8 billion into building new homes to help kick start the housebuilding industry.

It said there would be huge benefits for the economy if the Government spent the majority of the money it has set aside to build more than 100,000 social housing properties during the coming three years in the next 12 months.

Shelter chief executive Adam Sampson said: "These figures show that if housebuilding continues at this slow pace the Government will not meet its target to build 70,000 social homes over the next three years, and will fall way behind on its three million homes by 2020 pledge."

Shadow housing minister Grant Shapps said: "This year will see the lowest number of building starts for over 60 years while the number of houses built will struggle to reach 100,000.

"This appalling record is a direct result of Labour's arbitrary central targets. Caroline Flint needs to follow our lead by scrapping them and working with communities and local democracy to deliver the homes that are needed."