Biggest housing slump since the war

Many experts in the house-building industry are predicting a record-breaking slump – with new housing starts expected to fall to the lowest level since 1945.

The Construction Products Association (CPA), which represents companies that supply the house-building trade with materials, claimed there would be 147,000 new homes started this year, a drop of 27%. Private-sector housing is forecast to fall by 30%, taking it to the lowest level since 1992.

While social housing could be expected to fill the gap, this is not happening. New builds by housing associations are failing to grow in line with the government’s target of 45,000 new homes by 2011.

Michael Ankers, chief executive of the CPA, said: “The impact on the new-build housing market has been more severe than any of us anticipated. To be starting fewer homes at any time over the past 60 years illustrates the scale of the problem we face, especially given reports that we need to increase the number of homes we build.

“Unless something is done urgently to address this problem, the capacity in the industry will be cut to a level that will take a long time to build up, and it will not be able to meet the inevitable pent-up demand for new housing.”

With the housing industry in a slump, many would-be first-time buyers are inevitably asking how long mortgage finance will be restricted, and when the industry will meet Gordon Brown’s target of 240,000 new builds a year.

« back to development finance news