Housing starts lowest since 1945

Housing starts in 2008 will plummet to their lowest level since 1945, bleak industry forecasts reveal.

Around 127,000 new homes will be built this year, a fall of 27% from 2007 levels with output to spiral downwards until recovering in 2010.

And the news is just as bad for social housing. The Construction Products Association’s Construction Output Forecasts show social housing will fall 30% to the lowest level since 1992.

Forecasts for the whole construction industry show output will decline by 1.3%, making it difficult to meet the government’s targets to build 240,000 homes this year.

Construction Products Association chief executive Michael Ankers said it could take housebuilders a long time to recover even once the economy stabilises in 2010.

He said: “The impact on the new build housing market has been more severe than any of us anticipated.

“Unless something is done urgently to address this problem, the capacity in the industry will be cut to a level which will take a long time to build up and it will not be able to meet the inevitable pent up demand for new housing.”

But it wasn’t all bad news, with a “bright” outlook predicted for the infrastructure sector.

Figures show infrastructure output will grow 16% this year, 14% in 2009 and 5% in 2010 off the back of major rail projects such as Crossrail and the Thameslink project.

Commercial development will also increase as projects started in the past few years are completed.

Investment in education facilities will also grow thanks to the Building Schools for the Future project, with orders in the first quarter of 1008 75% higher than the same period last year.

Home Builders Federation executive chairman Stewart Baseley said the government needed to act immediately to return confidence to the sector.

He said: “We have been warning for months of the dangers of allowing this downturn to continue.

“If the government wants to deliver the homes the country needs and to avoid the housing market dragging the wider economy into recession, it must act now.”