Thursday May 15, 12:07 PM
England Q1 housing starts down 24 percent year-on-year - govt UPDATE
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LONDON (Thomson Financial) - The number of homes built in England fell by 24 percent in the first quarter of the year, reflecting a drop-off in demand for property as fears grow of a major fall in house prices.
Government figures showed the number of homes on which construction was started in England in the first three months of the year was down an annual 24 percent at 32,100, in seasonally adjusted terms.
The figure is down 21 percent on the last three months of 2007.
A succession of homebuilders have warned about the health of the market in recent weeks. Bovis Homes warned on its profits for the rest of the year and Persimmon (LSE: PSN.L - news) said it will stop building on new sites until conditions improve.
Meanwhile, demand for new homes is dropping sharply as consumers worry that house prices could fall sharply in the coming months. Government forecasts inadvertently leaked by Housing Minister Caroline Flint this week suggest a fall of 5-10 percent is a best-case scenario this year.
Last year, Prime Minister Gordon Brown made increased homebuilding a central plank of his policy to help first-time buyers onto the housing ladder, pledging three million new homes will be built by 2020.
The Royal Institution of Chartered Surveyors (RICS) said these plans are now in danger because homebuilders are unlikely to ramp up activity any time soon.
'Given the ongoing problems in the mortgage market and a weakening economy, the decline in house building will surely continue,' said David Stubbs, RICS' senior economist.
'This promises to makes the government's pledge ... a difficult one to keep,' he added.
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