Demand for new homes slump

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by Kay Murchie

According to the Office for National Statistics (ONS), demand for private new-build residential property fell sharply during the first 3 months of the year.

When compared to the last quarter of 2007, demand for new homes was down 27%, and was down 36% when compared to the same period last year.

Furthermore, demand for new construction fell from 8.3 million in the last quarter of 2007 to 7.7 million during the first quarter of 2008.

The news follows announcements from several housebuilders who are suffering as a result of the fall in property prices.

Last week, housebuilder Persimmon announced it is to stop building on new sites until market conditions improve, which could result in tens of thousands of job losses.

Persimmon said sales in the first four months of 2008 had declined 24%.

Traditionally, April is the busiest time for housebuilders but Persimmon said that in the last 3 weeks it had experienced lower sales volumes and increased cancellation rates.

Furthermore, Taylor Wimpey, the UK’s largest housebuilder, warned that the fall in property prices is turning into a disaster for housebuilders.

Last week, Taylor Wimpey said it is being hit by a 26% collapse in business - a much sharper fall than estimated at its last market update six weeks ago.