UK’s Housebuilding Targets Looking Further Out of Reach

6/10/2008 (Source: RICS UK construction market survey, Q3 2008)

The Government’s housing target of building two million new homes by 2016 is looking further out of reach with the downturn in the construction industry sending growth in private housing workloads to a record low, says the RICS UK Construction Market Survey.

Following significant declines over the past two quarters, private housing sector workloads plummeted yet again. The Government needs to build in excess of 200,000 new homes each year in order to reach their target of 2 million homes by 2016. To date, only 66,220 new homes have been built in 2008, with a fall below 25,000 per quarter likely by the end of the year.

RICS Senior Economist Oliver Gilmartin said: “With finance for projects becoming increasingly difficult to obtain, the Government’s ambitious target of 2 million new houses a year by 2016 is likely to fall well short. At current levels of production the number of new homes built will fall below 100,000 in the coming year.

Overall construction workloads declined at their fastest pace in the survey’s 14 year history with 38 percent more Chartered Surveyors reporting a fall than a rise. Adding to this gloom, 41 percent more Chartered Surveyors expect workloads to fall rather than rise over the coming twelve months as financial constraints continue to bite.

As a result the effect of the credit crunch is increasing as large scale public projects also come under financial pressure, with the very real possibility that core projects will struggle to obtain the necessary funding and may have to be either delayed or scaled back.

Gilmartin continued: “A rapid solution to the log jam in credit markets is necessary to limit the severity of the current downturn which is starting to affect the country’s infrastructure”

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