The dramatic 61% crash in the value of private housing site starts was uncovered in the latest survey by construction information specialist Glenigan.

It provides strong evidence that house builders are building out existing sites while reining back project starts as they face falling selling prices across most of the country.

The survey has also revealed the wider construction industry is being hit by spending cuts. Across the industry as a whole, the Glenigan Index for project starts in March fell by 31% on a year ago.

James Abraham, economist at Glenigan said: “The weak first quarter of 2011 is in sharp contrast to the strong rebound experienced a year ago in the run-up to the general election.

“The construction industry has been hit by reduced government investment and continued private sector weakness, with private housing experiencing the biggest contraction.”

Abraham added: “Glenigan recorded a 61% year-on-year fall in the underlying value of new private housing project starts during the three months to March compared with a year ago.

“This follows NHBC reports of more modest declines in the new home registrations in February compared to a year ago and indicates that, faced with renewed housing market weakness, developers are continuing to build out existing schemes but are opening up fewer new sites.”

Elsewhere, the Glenigan non-residential index contracted by 19%.

Abraham added: “Government spending cuts have already ensured a modest decline in the value of health, education and community & amenity builds, further retrenchment is anticipated from the start of the new financial year in April.”

According to the survey the underlying value of office starts fell by 45%, while retail starts were 27% down and civil engineering project starts fell by 16%.

Abraham said: “While civil engineering work is still below the first quarter of 2010, there has been a significant recovery compared to three months ago.

“In addition, in the last three months there have been some major projects starting, such as the redevelopment of Victoria Street tube station in London, which were not represented by the underlying trend.”