Number of new homes built falls to record low

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The Independent Online

The number of new homes that became available in England dived to a record low during the past year, figures showed today.





The housing supply increased by just 128,680 properties during 2009/10 - the lowest annual level since records began in 2000 and 23% down on the previous year, according to Communities and Local Government.



The fall was largely driven by a drop in new-build properties, which accounted for 97% of the total, with the rest made up of converted buildings and changes of use.



The figures came as other data showed the housing market had failed to pick up during September, with falls in both sales levels and mortgage approvals for people buying a home.



The house building industry has been hit hard by the credit crunch and housing market correction, which caused developers to mothball some sites and put other developments on hold.



The number of new properties coming into circulation during the year was nearly half the level of 207,370 seen during the market's peak in 2007/08.



The industry has warned the Government that measures are needed to halt the decline in house building.



Stewart Baseley, executive chairman of the Home Builders Federation, said: "There is no doubt that the previous planning system was not succeeding in delivering enough homes - but housing delivery, crucial to solving the housing crisis, is not yet increasing and in many areas has actually fallen.



"These figures reveal the extent of the housing supply problem and the need for real action now - cutting red tape and implementing incentives so we can build the homes the country needs."



The number of new homes available fell in all regions of England during 2009/10, with the North West seeing the biggest drop at 38%, followed by the South East at 32%.



Meanwhile, separate figures showed that the number of homes changing hands fell for the second month in a row during September, as potential buyers continued to stay away from the market.



Around 78,000 properties worth more than £40,000 were sold during September, well down on pre-credit crunch levels for the month of more than 120,000, according to HM Revenue & Customs.



Activity in the housing market looks set to remain muted going forward, with lenders reporting a further drop in the number of mortgages that were approved for house purchase during September.



The Bank of England's Trends in Lending report showed that mortgage approvals for house purchases by the major lenders had fallen back to a 17-month low of 44,000 in September, down from 45,000 in August.



Lenders blamed the fall on a "weakening in confidence" among potential buyers, due to expectations that house prices may fall again, as well as uncertainty about the impact of Government spending cuts.



Going forward, most major lenders expect activity in the market to remain subdued, with approvals for house purchase likely to be broadly unchanged, or even fall further.



The housing market has failed to benefit from its traditional summer bounce this year, as potential buyers have adopted a "wait and see" approach.



But sellers have continued to return to the market, creating a mismatch between supply and demand, leading to downward pressure on prices.



Halifax reported that house prices fell by a record 3.6% during September, and some economists have predicted that property will lose 10% of its value between now and the end of 2011.



But most lenders expect house prices to remain broadly unchanged or decline only slightly during the coming year.

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