Housebuilding slumps as developers delay new starts

The Department for Communities and Local Government has released statistics for housebuilding in England during the first quarter of 2008.

New housing starts were down 21% on the final quarter of last year (to 32,100) and 24% below the level recorded in the first quarter of 2007.

Meanwhile, housing completions for all dwellings in England fell to around 39,500 in the first quarter, an 18% drop on the same period of 2007.

The credit crisis has hit private housebuilders in particular, with new starts for this group of developers falling by 25% in the first three months of the year.

Last month, the UK’s leading housebuilder, Persimmon, announced that it was mothballing all new projects until further notice and more recently, Barratt, Redrow and Galliford Try have reported falling sales.

A lack of confidence in the housing market and a severely restrained mortgage market are being blamed for plummeting sales of new homes.

Persimmon should have begun work on 30 new projects in April and the group’s chief executive, Mike Farley, has warned that the credit crisis is throwing the Government’s targets for new house building into disarray.

Mr Farley suggested that the industry could complete only 110,000 homes in 2008, falling well behind the Government’s target of 240,000.

Yesterday, Prime Minister Gordon Brown announced plans to buy unsold homes from developers in a £200 million initiative that will see up to 1,000 properties purchased for social landlords and shared equity schemes.

Discuss this in the Finance Markets forums

Story link: Housebuilding slumps as developers delay new starts