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.