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Second Quarter New Build Figures Show Drop of 1,500

Construction began on fewer new homes in the three months to June as slower sales made construction firms decide to hold off work.

According to recent new build figures, construction on 38,730 new homes began in England in the second quarter, compared to 40,200 in the previous quarter. According to the Ministry of Housing, Communities and Local Government, it is also 4% lower from the 40,370 homes started in the second quarter of 2107.

If this slowdown continues, the Government target of 300,000 new homes per year will become even more remote. In the financial year of 2016-17, 217,000 homes were constructed in England, which is the highest total since 2007-08.

During the five years prior to the financial crisis, work commenced on over 40,000 properties each quarter. It took nine years to return to that level of productivity, with construction levels finally reaching 40,000 and more in 2016.

Industry analysts are concerned that the recovery was short-lived, as new build figures have now dropped below this level.

Capital Economics representative Hansen Lu confirmed that reduced demand has caused housing starts to decline and there is little reason to believe that demand will resume soon. Builders can be expected to slow activity over the rest of the year instead of risk building homes that they can’t sell.

Mr. Lu acknowledged evidence from builders that in July, site visits and reservations fell at their quickest rate since the financial crisis.

Structural Defects Insurance

The UK housing market has slowed down overall due to a combination of few sellers, high valuations, mortgage restrictions, and landlord taxation.

Builders are showing some optimism, however. In August they confirmed their intention to build 13,713 new properties in the months ahead, up 1% on the total in the same month last year.

According to the National House Building Council, the total figure in the three months to August was 42,547, or a rise of 11%.

This is not the same as actually commencing construction, however. These new build figures simply indicate an intention to start building in the coming months.

The Prime Minister recently announced £2bn worth of extra funding to construct more social housing.

According to the latest data, housing associations commenced work on 5,510 new homes in the second quarter, which is the lowest total since 2014. Councils started work on 260 properties.

Private housebuilders began work on 32,960 new homes. This is a drop from 34,490 in the previous quarter and the 33,800 reported in the second quarter of last year, but it accounts for 85% of all new home construction.

Polly Neate, chief executive at Charity Shelter, said that more social housing is needed. She said that the system has become too dependant on larger developers that will only build what they can sell, and too many people can’t afford these homes. It is a situation that can only be resolved if the cost of land goes down and more social homes are built.

Specialists in Construction Insurance

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