Fewer new properties are to be built in 2008 than at any time for 60 years.
Fewer new build homes will be constructed this year than at any time since the end of World War Two, it has been predicted.
The Construction Products Association (CPA) said that 147,000 properties would commence building works in 2008, 27 per cent fewer than last year. The downwards trend also puts prime minister Gordon Brown's promise to build three million new homes before 2020 in serious doubt.
Fewer homes being built will also impact on the mortgage industry in the long-term; this is because a limited supply of property in the UK will keep costs up due to the high level of demand created. Accordingly, mortgages will remain relatively unaffordable compared to countries where new housing is more plentiful.
Ongoing turbulence in the global money markets following the credit crunch and falling house prices have both hit the construction industry in recent times. Some of the sector's biggest names have been badly affected; for example, Barratt's was this week reported to be close to signing a £400 million loan agreement with creditors in order to meet its costs.
CPA chief executive, Michael Ankers, said: "To be starting fewer new homes than at any time over the last 60 years illustrates the scale of the problem we now face. Unless something is done urgently to address this problem, the capacity in the industry will be cut to a level which will take a long time to build up and it will not be able to meet the inevitable pent up demand for new housing."
