The steady decline in the UK housing market has been underlined by the latest numbers to come out of HM Revenue & Customs. They show sales of homes dropping to 72,000 in August, compared with 164,000 last August.

The figures show a continuing slide that not only highlights the collapse in the housing market, but it also presents severe problems for the exchequer, as revenue from stamp duty dwindles.

It now looks likely that annual transactions will fall to about 1 million in 2008, compared with the annual rate of more than 1.6 million seen in the past two year.

This is worrying for the Government. While not all stamp duty comes from house sales, it is a large slice. Meanwhile other sources of stamp duty are also drying up.

So looking at the global figures for the tax, the Treasury had been expecting revenue from stamp duty to fall in the year 2008-09 to £13,470 million from £14,124 in 2007-08.

But revenue collected between April and August this year at £4,185 million is down by 36% from £6,565 million in the same period a year ago.

Projecting forward the Treasury is looking at a hole in its finance of about £4.5 billion from loss of stamp duty.

The upshot for construction is potentially a very rough ride, unless the Goverment relaxes its borrowing rules. But encouragingly that is looking ever more likely by the day.