House building slows down as buyers struggle to borrow
HOUSE building has ground almost to a standstill on Teesside, according to civil engineering contractors, who blamed the credit crunch for squeezing buyers out of the market.
Their gloom deepened today as Nationwide revealed house prices fell this month at their sharpest rate since 1991.
Douglas Kell, of the Civil Engineering Contractors Association (CECA), who represents more than 80 small and medium sized firms in the North-east said confidence had collapsed among his members as developers mothballed sites and moved away from large-scale, budget home developments into higher value niche projects.
He said the North-east, having been insulated from the credit crunch, was now “leading the way” in a downturn, which, he claimed would accelerate consolidation in the industry and force larger firms to look outside of the region, leaving smaller companies to compete for a shrinking pot of work.
Findings from a CECA survey showed order books locally were down almost a fifth on last year. The figures were echoed by building suppliers who had seen as much as a 15% fall in trade counter sales.
“The houses are there to be built and sold and there’s interest to purchase those properties,” said Malcolm Nevison, key account manager for the Stockton branch of independent builders merchants James Burrell.
“When the weekend comes along people get in their cars and drive around sites, but when the sales office gets on to them a week later, the reply is they cannot get the funds.”
He said widespread discounting of property as developers sought to shift them off their books was contributing to lenders lack of confidence and building up negative equity.
“There is stock on the ground that [developers] are trying to sell at reduced prices which is having a knock on effect on people who have bought a house in the same road a couple of months earlier.”
The mood among civil engineers is an important test of temperature in the building industry, because they are the first on the site when new work begins.
Any drop in orders for ground preparation indicates a long-term slow down in the housing market.
“We’ve only seen the slow down this month,” said Mr Nevison, who urged the Government to unplug the bottleneck by persuading lenders to release funds. “If they can borrow money, people will purchase. It’s as simple as that.”
Nationwide said today house prices fell 2.5% in May, contributing to the longest consecutive period of monthly falls since 1992.
The price of an average house was now £8,000 less than this time last year.
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