The latest batch of dismal housing figures point to a downward spiral in housing and has prompted a leading city analyst to downgrade expectations on most major house builders.
Registered NHBC housing starts fell 9% in September as more evidence emerged of an impending “double-dip” in the house building sector.
New figures from the Home Builders Federation index, show that site visitors fell from -38 in July to -48 in August, and for net reservations to buy from -32 to -41.
Its index for prices achieved during the month fell from +4 to – 10, the first negative figure since July 2009.
Imtiaz Farookhi, chief executive of the NHBC, said difficulty in obtaining mortgage finance was impacting on starts.
“Confidence seemed to leave the market around the time of the election and has not returned,” he said.
“The autumn selling season, which is traditionally strong, has yet to take hold, due no doubt to a wait and see policy from consumers.”
He added: “The Spending Review has brought a reduction in funding for social housing and will, undoubtedly, have a knock-on effect for the sector as a whole and presents a significant threat to the fragile recovery we have experienced thus far.”
Alastair Stewart, housing analyst at City investment bank Investec, said: “We see the serious risk of a double dip in house prices and land values.”
The deteriorating outlook saw Investec downgraded its expectations on all major house builders, with the exception of Berkeley Group.
Stewart said: “The main catalyst for this has been Bellway’s comments that the housing market has deteriorated markedly in recent weeks and a welter of negagtive housing data.”
He warned that house builders feared current problems will be dwarfed by the impending reworking of mortgage regulation prompted by the Financial Services Authority’s Mortgage Market Review.
Yesterday, Government figures showed the net number of new homes this year slumped 23% to an all time record low.
Just 128,680 net additional dwellings were provided last year compared with around 167,000 in 2008/9.
This figure is even lower than the previous record low of 130,510.
The North West saw the largest annual fall of 38%, followed by the South East, down 32%.
The dismal figures come after the Government unveiled large cuts to housing budgets in their spending review.
House builders across the country have had called for urgent Government action to halt the decline and avoid deepening the housing crisis.
Their biggest concern is that after scrapping housing targets five months ago there has not been a quick enough introduction of the promised national planning framework and house building incentive –The New Homes Bonus.
This is causing a damaging hiatus in house building, exacerbated by falling mortgage availability and yesterday’s announcement that Government housing funding has been slashed has added to fears.
Stewart Baseley, Executive Chairman of the HBF, said: “There is no doubt that the previous planning system was not succeeding in delivering enough homes – but housing delivery, crucial to solving the housing crisis, is not yet increasing and in many areas has actually fallen.
“These figures reveal the extent of the housing supply problem and the need for real action now – cutting red tape and implementing incentives so we can build the homes the country needs.”