THE downturn in the housing market is beginning to take its toll on the construction industry, according to new figures released by the Office for National Statistics.
It was an inevitable consequence of the slump in house prices that construction of new homes would become less attractive to developers.
That, combined with a drop in the number of buyers and buy-to-let investors looking for new homes (because they cannot get a mortgage), has finally stalled the tidal wave of new residential building in the UK.
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Statistics show that the number of new homes being built fell by more than a quarter in the first three months of 2008, and the volume of private housing orders declined by 27 per cent.
This will be causing pain to the building industry, especially the sub-contractors which rely on big developers for work. It will be interesting to see what the fallout of the drop in building activity is and its impact on the economy.
The lack of new building is part of the cycle of correction happening at the moment, all tied in with the credit crunch.
The easy availability of big mortgages was fuelling house price growth, and developers were jumping on the band wagon, churning out thousands of new-build flats and houses and turning a nice profit as they were snapped up by speculative buy-to-let landlords, hoping to cash in on the property boom themselves.
Now that the same profits are no longer available and the buyers are struggling to come up with the finances to buy, developers have withdrawn from the housing market.
They will certainly return when the market stabilises and they can be sure of a decent profit, but in the meantime many small businesses depending on construction for their livelihoods will struggle.
The ones that survive will be those businesses who stuffed enough profits away during the good times, to weather the storms of the bad that are massing on the horizon.
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