Building slowdown sparks call for industry stimulus

A total of 21,540 homes were begun during the three months to the end of June, a 10 per cent fall compared with the previous quarter, Department for Communities and Local Government (CLG) figures showed.

The decline is the second in a row in which housebuilding starts have fallen compared with the previous quarter and the latest figure is the lowest since the three months to June 2009.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (RICS), said the “paltry” number of new starts over the three months is barely one-third of what is generally accepted as the number needed to meet growing demand.

He said: “These figures demonstrate the widening scale of the problem in delivering sufficient new housing.... It’s clear something bold is desperately needed to address the current housing crisis.”

Within the latest total, house building by private developers declined by 7 per cent on the previous quarter, while starts by housing associations fell by 23 per cent.

The number of new properties completed also dipped by 6 per cent to 29,470 in the three months to June, following increases seen during the previous two quarters.

The industry was hit hard by the credit crunch as developers struggled to raise the finance they needed, while potential buyers could not get mortgages.

The beginning of 2008 saw a period of rapid decline in building starts to a trough in the spring of 2009. Completions fell more slowly than starts but over a longer period.

The industry began to recover from 2009 and over the last year-and-a-half completions have tended to increase slightly, although starts have shown decreases over the first half of 2012.

The Government introduced its NewBuy guarantee scheme in March, which has been forecast to help as many as 100,000 people buy a new-build home with a deposit of 5 per cent or 10 per cent rather than the 20 per cent typically demanded by lenders.

The scheme enables lenders to offer mortgages for as much as 95 per cent of the value of newly-built properties, partially underwritten by guarantees provided by the Government and builders, but only about 600 people reserved new homes in the scheme’s first three months.

Shelter chief executive Campbell Robb said: “These shocking figures make it impossible for the Government to ignore the need for radical action to boost house-building.

“With a flatlining construction sector, building significant numbers of new, genuinely affordable homes would create jobs and stimulate the economy.

“More importantly, it would send a clear message to the millions of people priced out of home ownership or struggling with high housing costs that the Government is on their side.”