Housebuilding: new-build market slumps

This spring has seen the number of reservations of new-build houses and flats plummet by two thirds as potential homebuyers struggle to secure a mortgage deal.

The Guardian reported that Home Builders Federation (HBF) figures on net reservations (the number of confirmed buyers less cancellations) was between 60% and 65% lower than a year ago.

Most firms blamed the scarcity of mortgage finance following on from the credit crunch.

Meanwhile Alistair Stewart, construction sector analyst at investment bank Dresdner Kleinwort Wasserstein, warned that completed sales could be even lower.

"We believe that the cancellation rate is rising faster as lenders pull back from new-build flats in particular, strangling demand from the marginal first-time buyers and investors," he said.

Last week Persimmon said it would stop new developments after its sales fell 25% in the first four months of this year.