New home builds 'fall to 50-year low'

Posted: 03 Oct 2008 13:55:18 GMT

Research has indicated that new private-house building activity is at a 50-year low.

With prices in the housing market now plummeting faster than they ever did during the recession of the early 1990s, data collected by the Independent suggests that the UK is now being inexorably dragged into a recession.

Although the construction industry accounts for just six per cent of Britain's GDP, instability across the rest of the economy means that the current crisis in the building industry is enough to drag the whole country into a slump.

Lower prices should be good news for new homebuyers, but most are unable to secure mortgages at reasonable rates and the Independent also reports that government targets for new housing are now in extreme jeopardy.

Yesterday, the Bank of England issued a statement reading: "Concerns about the economic outlook and falling collateral values contributed to this tightening in credit availability."

It suggested that default rates on household lending had risen in the past three months, and would likely continue to increase.

With the mortgage market taking a recent nosedive, financial expert John Charcoal has urged homeowners to secure new deals at least six months before their current ones expire to ensure they get the most favourable conditions possible.

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