Serious Decline in Number of Home Starts 23/07/08

Statistics released today by NHBC show that there was a significant drop in private sector activity during the three months from April to June 2008, with applications to start new homes totalling only 20,973 - a decrease of 51 per cent on the same three-month period a year ago (42,485). Housing association registrations also fell during the second quarter of this year, with applications totalling 9,018 - 13 per cent less on the same period a year ago (10,403).

Imtiaz Farookhi, NHBC Chief Executive, says: "Our latest figures show that the effects of the downturn in lending and the pressure on house prices is continuing to impact heavily upon the private house-building sector.

"Results for the first half of this year show that we received 50,110 applications from private sector housebuilders to start new homes, 42 per cent less than on the same period a year ago (86,418).

"Regionally the biggest percentage decline in new home starts during the second quarter was seen in the North West and the West Midlands, where our figures show a year-on-year decrease of 58 and 57 per cent respectively. Greater London was the only region to experience an increase in new home starts (eight per cent) during the period, where it appears that there is still a strong demand for new homes which is keeping market confidence slightly higher."

The total number of new home completions also fell during the second quarter of 2008. NHBC statistics show new build (private and housing association) completions totalled 44,548 in the three months to the end of June - 12 per cent lower on the same period last year when 50,721 new homes were completed.

First time buyers found their ability to buy recovered slightly in the second quarter of 2008. NHBC's first time buyers' ability to buy index increased by seven points during the quarter to 57. The index is based on a formula which takes into account the average cost of homes bought by first time buyers, average income and mortgage interest rates (from the Nationwide Building Society). The higher the index, the greater the ability to buy.

Additional figures for quarter two 2008 show that the average number of new homes sold each day in the UK was 454, 23 per cent lower on the same period a year ago (592).

Ends

Note to editors:

FOR A BREAKDOWN OF NEW HOMES REGISTERED BY REGION / COUNTRY FOR Q2 2008 PLEASE E-MAIL mblamey@nhbc.co.uk

NHBC is the leading warranty and insurance provider for new homes in the UK. It was established more than 70 years ago as a non-profit distributing company. NHBC's primary purpose is to help raise standards in the new house-building industry and provide consumer protection for new homebuyers.  NHBC's ten-year 'Buildmark' warranty covers more than 80% of new homes built in the UK and currently protects more than 1.7 million homes.