House building in England slumps

Construction firm Persimmon has stopped building houses on fresh sites

House building has slumped under the impact of the credit crunch and is on its way to its lowest level for nearly a decade, government figures show.

There were 32,100 new housing starts in England in the first three months of the year, the Department for Communities and Local Government said.

That was 21% lower than in the previous quarter, and 24% down on a year ago.

The market has been hit by a lack of mortgage funds, and house builders have warned of falling sales and new starts.

The slump in new starts is concentrated among private house builders, and government figures showed that their new starts have fallen by 25% in the first three months of the year.

New build

Yesterday, house builder Barratt said its sales were falling significantly.

It blamed this on the drying up of the mortgage market under the impact of the credit crunch.

Similar messages have come this week from Redrow and Galliford Try.

Last month, the building firm Persimmon said it would not build homes on any new sites until the situation improved.

Thursday's figures from the Department for Communities and Local Government suggest that if present trends continue, then new house building this year will hit its lowest level since before 1998.

In fact, the number of new housing starts has been declining for the past three years, though the trend has suddenly become worse.