The Government needs to act immediately to prevent lasting damage to housebuilders, the industry body said as the number of homes being built slumped nearly 20 per cent and another big name announced a huge drop in profits.
The Home Builders Federation said Government targets for building new homes – which were meant to see a new home ever 30 minutes in the West Midlands – would be unlikely to be met unless firms are given help to survive the economic bust that has already claimed local firm Chase Norton.
A spokesman for the HBF said: “History shows us the housing market is cyclical. The long term housing market is good because no one is disputing the increasing need for new houses.
“What we need to see is immediate action to create more liquidity in the mortgage market.
“What we don’t want to see is the industry losing so much capacity because of this economic downturn that when things improve it cannot cope with all the new projects that will come along then.”
Housebuilding giant Persimmon announced a massive drop in profits because of the difficult trading conditions. The firm – which has already cut 2,000 jobs this year – saw profits for the six months to June 30 drop a hefty 59 per cent to just over £100 million, blaming the uncertainties surrounding the market, and the difficulty of getting a mortgage.
Housebuilding companies have been some of the hardest hit by the credit crunch, as demand for new homes has dried up because potential buyers are unable to secure a mortgage.
In July, Warwickshire firm Chase Norton Construction collapsed with the loss of more than 100 jobs after business stagnated.
The £40 million firm, run by Birmingham Chamber president Rod Ackrill, had previously been involved in some of Birmingham’s major redevelopment projects.
Most housebuilders have been suffering from the credit crunch, and there is speculation that more significant housebuilders could be on the verge of going bust.
The extent of the slump in the housebuilding industry was shown as the Government said the number of new homes being built in England had dropped by 19 per cent during the past year.
A total of 33,400 new properties were started during the three months to the end of June.
The lack of activity has meant the sector has shed about 5,000 jobs in the last few months alone. Many firms have resorted to special deals, such as offering to pay for stamp duty, to try to tempt now buyers into the market.
The HBF is calling on the Government to take immediate action to help housebuilders, saying an announcement cannot wait until the pre-budget report at the end of the year.
There was speculation the Government would be reducing stamp duty, to stimulate interest in the housing market, but no announcement has been made.
Meanwhile, official figures on the amount of stamp duty paid were withdrawn amid doubts about their accuracy.
The figures, which would have revealed the true extent of the collapse in house buyer confidence, were postponed by HM Revenue & Customs after taxmen discovered “some significant and unexplained differences in the statistics published last month”.
All the results since February this year have also been withdrawn, while HMRC looks at the way the figures are compiled.
