Sharp fall in number of new homes being built

THE number of new homes built in Scotland plunged by one-fifth last year and has been forecast to fall further as more evidence emerged of a sharp decline in housing market activity in the first quarter of 2010.

There was a 20 per cent year-on-year drop in new house building completions and a 26 per cent fall in new starts in 2009, according to figures from the Scottish Government.

The data included a 35 per cent slump in the number of private sector homes completed last year and a 42 per cent reduction in private sector starts.

However, there was a 30 per cent increase in affordable home completions in 2009 despite a sharp dip in the final quarter.

Jonathan Fair, chief executive of industry body Homes for Scotland, claimed the new figures underlined the extent of Scotland's housing crisis.

He said: "We believe total housing output will struggle to exceed 12,000 units this year – less than half pre-credit crunch levels and less than half of what is required."

Further evidence that the market is struggling to recover was provided by the Council of Mortgage Lenders (CML), which yesterday said the number of loans given for house purchase in Scotland fell by a third in the first three months of 2010.

There were 9,700 loans to homebuyers in quarter one, down from 14,400 in the last three months of 2009 but up 28 per cent from the same period last year.

Kennedy Foster, policy consultant for CML Scotland, said the low level of activity in the first three months of 2010 was down to two events.

He added: "The end of the last stamp duty holiday in December 2009 will have caused a drop in house sales at the start of the year and the severe winter in Scotland will have adversely impacted on the market."