Government’s new homes target unlikely

Permalink: Government’s new homes target unlikely
by Kay Murchie

The House Builders Association has said that the Government’s target to build 240,000 new homes this year will not be reached.

The organisation said just 110,000 new homes are likely to be built by end of 2008 while just 80,000 will be built next year.

Commenting on the shortfall, Caroline Flint, Housing Minister, said I don’t underestimate the challenge that housebuilders are facing and clearly the number of homes being built this year has gone down.

Ms Flint added that the Government is monitoring the situation to see and listen to different forecasts about what might occur in the next 12 months.

When Gordon Brown became Prime Minister last year, new houses became a top priority. However, since then house prices have fallen and this has had a knock-on effect on many industries, in particular, the construction industry.

Taylor Wimpey recently announced it was to close 13 of its 39 offices across the UK, resulting in 600 job losses. The cuts represent over 10% of its 4,700 UK workforce.

Housebuilder, Persimmon, recently announced it was to stop building on new sites for the time being.

Job losses are not just affecting the construction industry but related industries such as materials suppliers and removal men are suffering.

Roger Humber of the House Builders Association we’ve not seen anything like this post-war. It’s essentially a financial crisis, more like 1931 than anything else that we’ve seen.

Last week, Barratt Developments, the UK’s second biggest housebuilder by volume, saw its shares dive 40%.

Merrill Lynch recently warned that the housing market could face a repeat of the 1990s crash. Merrill said there is growing evidence of consumers behaving in a manner similar to that seen in the early 1990s, in that concerns over job security and falling house prices are leading to a reluctance to make a house purchase.

Around £5 billion has been wiped off the value off the big housebuilders including Barratts, Persimmon and Taylor Wimpey since the start of the year.