Gordon Brown's ambitious house building plans are unlikely to be achieved because of a downturn in the construction industry, according to the Royal Institute of Chartered Surveyors (RICS).
Falling demand for housing, coupled with the credit crunch, have caused construction firms to reduce their workloads, meaning supply issues are likely to continue supporting high house prices in the UK.
A RICS survey shows 16% more chartered surveyors saw a rise in new building than a fall in the final quarter of 2007, down from 17% in the previous quarter.
The slowdown in construction is likely to hamper Gordon Brown’s plans to build over 2m homes, as a way of tacking unaffordable housing in the UK.
David Stubbs, chief economist at RICS, says: “Current financial instability is rocking market sentiment and may see the industry enter a period of uncertainty. Doubts are likely to intensify over the ability of the Government to meet its ambitious house building targets. Indeed, it is worth noting that new housing starts have already begun to stagnate in recent quarters.”
However, some areas of the UK have seen growing construction, with Scotland outperforming other regions as it experienced its eighth consecutive quarter of construction growth.
Recent reports have suggested house prices are slowing, with some claiming they are now experiencing negative growth. However, many analysts feel the UK’s long-term supply problems will prevent a major housing crash, and may even continue to power growth as the economy slows down.
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