According to the latest figures from construction analysts Glenigan the underlying value of residential starts fell by 6%.

Private housing project starts increased by just 1% in the third quarter of the year, compared to the same period in 2013.

But a 17% fall in social housing starts, dragged the Glenigan Residential Index into negative territory for the first time since April 2013.

The figures follow the release of the latest Nationwide House Price Index on Tuesday which reported a 0.2% drop in UK house prices in September, fuelling fears of a property market slowdown.

Allan Wilén, Economics Director at Glenigan, said: “Despite signs that the breakneck growth in house prices and purchasing activity is easing, market conditions remain positive for house builders.

“Signs of a stabilisation in new project starts underlines the challenge the government faces in meeting housing need.”

He added: “With social housing seeing a 17% fall in the value of starts in the latest quarter, an increasing share of the UK’s housing supply is dependent on the private sector.

“The planning pipeline suggests that house builders are taking up the challenge, with 54,600 private housing units approved in the second quarter – up 28% on the previous quarter and 71% higher than a year earlier.

“However this rapid improvement was in part due to the approval of several major schemes, including more than 6,700 at the Earls Court redevelopment in West London, and it will be a number of years before these are fully realised.”

Across the industry as a whole the value of all construction project starts rose by 2% during the three months to September compared to a year earlier.

The retail sector is now booming with a 54% rise in starts driven by developments such as the £80m Banbury Gateway retail park in Oxfordshire.

Rises were also seen in the value of office work (12%), hotel and leisure (10%) and industrial (8%) sectors.