Builders demand housing help

House builders issued a new plea yesterday for Government action to rescue the housing market. The day after Tarmac announced that it is selling its homes division, the National House-Building Council said housing starts were 14 per cent lower in the first seven months of this year than the same period last year.

Separate figures from the Nationwide Building Society piled on the gloom. They showed that house prices edged up a fraction last month, but were lower than a year earlier. The Nationwide said it expected house prices to weaken further before the end of the year.

Tony Allen, chief executive of the NHBC, said the steep decline in housebuilding underlined "the urgent need for the Government to take urgent steps to stimulate home buyer confidence and boost optimism within the entire house- building industry". Growing pressure for the Government to slow the downward spiral in the housing market has prompted the Treasury and the Prime Minister's policy unit to start assessing possible Budget measures.

City economist David Miles at Merrill Lynch said each new piece of bad news made the outlook worse. "Expectations are among the keys to demand in the housing market. The market will be dead for the next two years, with no significant rise in prices until mid-1998," he said.

Prefiguring official figures for housing starts due out today, the NHBC reported 13,120 new starts in July. It brought the total for 1995 to date to 98,943, down from 115,201 in the first seven months of last year. An average of 649 new homes a day were sold last month - 5 per cent lower than the previous July.

The Nationwide Building Society said yesterday that its index of house prices, adjusted for seasonal fluctuations, had recovered by 0.2 per cent in July after three successive monthly declines but was 1 per cent lower than a year earlier. Paul Sanderson of the Nationwide said: "Prices have weakened since the end of last year and will be flat at best until the end of this year."

Earlier this week, Halifax building society reported a 3 per cent decline in house prices in the year to July. It predicted that prices would remain flat for the rest of this year.

Housing market gloom took the shares in house builder Redland to a new low yesterday. They closed down 9p at 398p.