House-building tails off

HOUSE-BUILDING in Devon and Cornwall has witnessed a sharp fall in the last 12 months – but appears to be holding its nerve compared to dramatic falls across the UK.

Provisional figures seen by the WMN show a 14.5 per cent drop in the number of homes firms want to build across the two counties as a result of the credit crunch, a fall that is likely to have cost hundreds of jobs.

In the 12 months to the end September, there were 640 fewer applications for warranties – a key first step in the construction process – compared to the same period a year earlier, according to the National House Building Council (NHBC).

But Devon and Cornwall, still one of the most desirable locations to buy property, so far appears to have escaped the worst of the downturn.

Counties such as Cleveland, South Yorkshire and Staffordshire reported a retraction of 50 per cent or more.

Imtiaz Farookhi, chief executive of the NHBC, said: "Our latest figures show that the downturn is continuing to have a severe impact on the output of new homes, particularly in the private sector."

Tim Jones, chairman of the Devon and Cornwall Business Council, said: "This is not surprising, yet it doesn't fully reflect the market. The reality is we will drop to the national average – or worse – in the next quarter.

"All the messages coming back to us are very bleak. People just aren't getting mortgages and we will see house-building fall to a trickle."

Since the credit squeeze began more than a year ago, households have found it increasingly hard to secure a mortgage, with demand for housing drying up as a consequence.

Surveys suggest house prices have fallen by a record 15 per cent in the past year, wiping nearly £30,000 off the average home's value.

In turn, builders have mothballed housing schemes and slashed jobs amid dire profit warnings. One of the most high-profile casualties has been work on Cranbrook, a town which could house up to 7,500 families outside Exeter, which has been postponed "indefinitely".

Builders registered with the NHBC, which provides warranties on more than 80 per cent of new homes built in the UK, have to register a house with the organisation at least 21 days before building starts on site.

Statistics show work commenced on 2,398 properties in the year in Devon. It represents a 14 per cent drop from 2,791 in the same period a year earlier.

Meanwhile, applications fell by 15 per cent in Cornwall and the Isles of Scilly, from 1,660 down to 1,413.

One glimmer of hope is the social housing sector. With fierce demand for affordable housing across the region, private sector developers are increasingly drawn to social housing projects to keep business ticking over.

In the three months to September, the WMN found a 24 per cent rise in warranty applications for public sector builds in the wider South West compared to last year. Private builds, meanwhile, dropped a massive 48 per cent.

Teresa Butchers, chief executive of the Devon and Cornwall Housing Group, which manages 17,000 properties across the two counties, said housing associations, local authorities and the private sector were working closely to bring forward low-cost housing and social rents.

She said: "The situation is very, very difficult at the moment, but that's not to say there isn't still building going on."