Housing starts lowest since 1924 as construction bears brunt of recession
The number of homes being built in Britain has plummeted to its lowest level since the early 1920s as falling house prices exacerbate the crisis in the construction industry.
A report out today from the Construction Products Association (CPA) and Ernst & Young reveals there have been just 135,000 housing starts this year, compared to 203,500 in 2007. This figure, excluding the second world war when few houses were built, is the lowest since 1924, when there were 87,000 housing starts during a period of severe deflation.
Many projects date from before the worst of the financial crisis hit and there are fears that homebuilding will grind to a virtual standstill in the new year - leading to tens of thousands of job losses in the building trades.
Commercial property is also being hit hard, with the CPA expecting falls in office construction alone of 24% next year and 19% in 2010.
The CPA said this was partly offset by the increase of public sector spending on construction. However, this increase in spending, which the Treasury anticipates will lead to unprecedented government borrowing over the next few years, will not be enough to stop overall construction falling significantly over the next two years.
Demand for new houses has plunged over the past year as would-be buyers have been unable to obtain mortgages from struggling banks and building societies despite falling interest rates.
The Bank of England said mortgage approvals hit a record low in October, despite a fall in interest rates at the start of the month. Lenders approved 32,000 home loans for buyers during the month, equalling the record low hit in August and down 27% from the 2007 peak.
There is now considerable doubt whether the government can fulfil its target of building 3m homes by 2020. The prime minister, Gordon Brown, and housing minister Margaret Beckett held a crisis meeting with several industry bodies, including the Home Builders Federation and the Council of Mortgage Lenders, last month to try to come up with ideas to revive the flagging sector. The consensus of the meeting attended by Construction Skills and HBOS was that not much can be done until banks start lending again.
House prices have continued to fall in the midst of the credit crunch.
The property website Rightmove says today that England and Wales are only halfway through the downturn. Prices have already fallen 10.2% - or £24,692 - since their peak in May, and Rightmove expects them to drop another 10% next year.
But the website added that, while asking prices had fallen by 10%, feedback from estate agents suggested actual sale prices had dropped by 25% from their peak.
Miles Shipside, commercial director of Rightmove, said: "On the basis that prices actually being achieved have fallen by a quarter, we predict that overall prices are now within 10% of bottoming out."
He said this would not be a price recovery as the ongoing effects of "economic upheaval and reticence to lend" would leave prices bumping along the bottom during 2010.
Shipside said: "In the hardest-hit areas where unemployment and distressed sale supply will remain highest for longest, prices will fall further and remain stagnant for longer."
The downturn in the housing market will result in huge job losses. Thousands of builders, electricians, plumbers, removal people and carpenters are likely to lose their jobs. Accountants BDO Stoy Hayward said this month that 6,400 construction businesses could fail by mid-2009.
Roger Humber, strategic policy adviser to the House Builders Association, said earlier this year that 250,000 people whose jobs are linked to the building industry could be put out of work if the housing downturn persists.
"Many more thousands of self-employed tradesmen and sub-contractors, building materials producers, manufacturers of white goods, carpets, curtains, DIY, estate agents and solicitors would be affected. If this continues to unwind, ultimately there's no reason why it couldn't affect a quarter of a million jobs," he said.
In 1924 ...
The last time housing starts fell this low, Britain's economy was reeling from the cost of the first world war and about to face a decade of global economic turmoil. Labour prime minster Ramsay MacDonald was in power until November when he was succeed by Conservative Stanley Baldwin. Winston Churchill became chancellor and the next year oversaw Britain's formal return to the Gold Standard, which led to mass unemployment and the miners' strike. The late 20s and 30s was a period of intensive house-building. In 1919, there were 8m homes, but by 1939 there were 12m. 词汇：
bear brunt of sth: 承受主要压力
exacerbate: 加剧
Construction Products Association:(英）建筑产品协会
Ernst&Yong: 安永（会计咨询事务所）
grind to a standstill: 停滞
public sector spending on contruction: 公共建设支出
Council of Mortgage Lenders:抵押贷款机构委员会（英）
asking price: 开价，询价
bottoming out;跌落最低
bump along;颠簸
stagnant: 停滞的
plumber: 水管工
removal people:搬运人员
sub-contractor: 分包商
white good: 白色家电
unwind： 松弛
reel: 摇摆
economic turmoil: 经济震荡
chancellor: （英）财政大臣
Gold Standard: 金本位制 |
