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Small firms suffer as housing starts slump

Housing starts crashed in England by 11 per cent in the first quarter of this year, with the housing association sector the worst affected.

Figures from the Department for Communities and Local Government showed that starts totalled 24,140 in the January to March quarter, 11 per cent below the final quarter of 2011.

While house builders’ starts fell by 8 per cent, social housing was down by 11 per cent, reflecting the impact of public spending cuts.

The fall in starts was the sharpest since the third quarter of 2010/11 but still left numbers 42 per cent above the trough of March 2009.

Annual housing starts totalled 104,970 in the year to March 2012, down by 6 per cent, compared with the year to March 2011.

Completions were up by 6 per cent in the last quarter to 31,010 but remain 36 per cent below the peak they achieved in March 2007.

Annual housing completions reached 117,870 in the year to March 2012, 6 per cent up on the year to March 2011.

Both the private and housing association sectors increased completions by 8 per cenr but the total was brought down by the small local authority sector, which saw a 6 per cent fall.

Construction Products Association economics director Noble Francis (pictured) said the figures reflected the ability of volume housebuilders to keep work flowing while their smaller competitors struggled.

“Small and medium builders find things very challenging as they are critically dependent on finance from banks and on the planning system,” he said.

“Large builders have many years of land, so lending in not a key factor for them. On social housing it is absolutely the public spending cuts that are hitting there.”

Mr Francis said the rise in completions showed “larger house builders are building out sites they have mothballed”.

Despite the slump in starts, he said this was “not the start of a downward spiral for house building as the larger builders are working”.

Roger Humber, strategic policy adviser at the House Builders Association, which represents smaller firms, said: “Small and medium house builders are beset by a raft of problems with bank finance, lack of access to New Buy and the planning system is a nightmare. In the transition to the National Planning Policy Framework most planning authorities seemed to have gone on strike until they saw it.”

Housing associations are partly dependent on public money and so have suffered from spending cuts.

National Housing Federation chief executive David Orr said the 6 per cent fall in housing starts “must be a huge wake-up call” to the government.

Mr Orr welcomed David Cameron’s remarks in a speech on the economy today, in which the prime minister said he had “now asked the Treasury to examine what more can be done to boost credit for business, housing and infrastructure”.

 

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