Home building target 'out of reach'

1:30am Monday 6th October 2008

The Government's house building target looks out of reach with fewer than 100,000 new homes expected to be built this year, it was warned.

The Royal Institution of Chartered Surveyors said construction workloads were declining at their fastest pace since its survey was first launched 14 years ago.

As a result it said the Government's target of having two million new homes built by 2012 looked unlikely to be achieved.

It said more than 200,000 new homes needed to be built each year in order to meet the target, but to date only 66,220 new homes had been built this year.

The group found that overall construction workloads had fallen to a record low, with 38% more chartered surveyors reporting a fall than those who saw a rise.

At the same time, 41% more chartered surveyors expect workloads to fall further during the coming 12 months as the credit crunch continues to bite.

The figures are even starker in the housebuilding sector, with 60% more surveyors reporting a fall during the third quarter of the year, following significant declines in each of the previous two quarters.

RICS Senior Economist Oliver Gilmartin said: "With finance for projects becoming increasingly difficult to obtain, the Government's ambitious target of 2 million new houses a year by 2016 is likely to fall well short. At current levels of production the number of new homes built will fall below 100,000 in the coming year."

The research found that for the first time, construction workloads across all sectors were in decline, with private industrial and infrastructure, the only two sectors that had previously seen rises, now also in negative territory.

The group said the impact of the credit crunch was increasing, with large scale public projects also coming under financial pressure. It said there was a "very real possibility" that core projects would struggle to obtain the necessary funding, and they could be either delayed or scaled back.

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