Housing starts down by 50%

The number of homes started by housebuilders has now fallen by more than half in the last year, according to the latest data from the National House Building Council.

The data, compiled exclusively for Building, shows the number of homes begun in May fell to just 9,589, compared to 20,019 in the same month last year, a fall of 52%. The picture, which includes new social homes, is even worse for private housing, with a fall of 56% after just 6,890 were commenced in May.

This figure is the worst figure ever recorded by the NHBC, outside of the traditionally low December figures for 1989, ’90 and ’91, in the depths of the last housing slump.

NHBC figures go back over twenty years.

The fall in production comes as housebuilders continue to react to the accelerating housing market crash, and follows Monday’s prediction by the Construction Products Association that housing numbers could fall to their lowest levels since the second world war. However, the CPA’s prediction was based on a production fall of 27%, meaning the NHBC’s figures suggest the picture will actually be even worse.

It also represents a worsening on official government data, which is published quarterly, that so far has shown building starts falling 21% in the first three months of the year compared to 2007.

The government has a target to build two million homes by 2016 and three million by 2020, which requires the industry to build 240,000 homes a year. If this month’s figures were repeated across the year, the annual figure would be less than half that.

Imtiaz Farookhi, NHBC chief executive, says: "Activity by private house builders was particularly low in May this year. Our latest figures show that there were 6,890 new homes started for private sale during the month. The drop in housing starts continues to reflect the difficult market conditions being experienced by house builders."

Roger Humber, strategic policy advisor to the House Builders’ Association, said: “Sales have been catastrophic, so it is inevitable, unless housebuilders see any return of the mortgage market, that production will come down in line with those sales.

“This is now interrupting the much needed increases in supply, and no-one can have any means of knowing when the market is likely to come back.”