Housing starts for 2008 are forecast to be the lowest since 1945 according to the latest Construction Output Forecasts from the Construction Products Association, which have been revealed today. The forecasts point to little more than 147,000 new housing starts in Great Britain this year, a fall of 27% from the levels in 2007 and the smallest number since 1945. Private sector housing starts are forecast to be down by 30% to the lowest level since 1992 whilst the social housing programme is failing to grow in line with government's plans for 45,000 new homes a year by 2011.

The forecasts for the whole of the construction industry show that the previous expectations that the industry would grow in 2008 have now been reversed and output is expected to decline by 1.3%. Prospects remain good for construction work on infrastructure projects, contracts are now being let for the major Building Schools for the Future programme, and work has started on building the Olympics projects. Growth in these sectors is, however, more than outweighed by the decline in the housing market, a sharp fall in investment in new industrial buildings, and reduction in the repair and improvement to existing social housing.

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Commenting on these latest forecasts Michael Ankers, Chief Executive of the Construction Products Association, said: "The impact on the new build housing market has been more severe than any of us anticipated. To be starting fewer new homes than at any time over the last 60 years illustrates the scale of the problem we now face, especially given recent reports from people like Kate Barker that we needed to increase the number of houses that we build. Unless something is done urgently to address this problem, the capacity in the industry will be cut to a level which will take a long time to build up and it will not be able to meet the inevitable pent up demand for new housing.

"On the broader outlook, long-awaited government programmes for education and to improve the country's infrastructure are now coming on stream and will help reduce the impact of the housing downturn on the construction industry. Nevertheless 2008 seems likely to see the sharpest fall in construction output since 1993 with the situation deteriorating further still in 2009 before a modest recovery in the following year."

Mr Ankers continued: "In response to these forecasts we are asking government to respond urgently to the housing crisis by; providing help for first-time house buyers to secure mortgages; investigate ways in which the MPC interest cuts can be fed through to mortgage payers; and by increasing their social housing ownership scheme. It is also essential that the government remains committed to the Capital Investment Programme as set out in last year's Comprehensive Spending Review."

(JM/NS)