Credit crunch 'hitting house-building sector'

Mortgage shortages are halting development on new homes, a construction expert has claimed.

Recent years have seen a surge in new property building to meet soaring demand for homes, but Brian Berry, director of external affairs at the Federation of Master Builders (FMB), says most construction work will be put on hold in reaction to the current credit crunch.

He explains: "[It] has made lending much more difficult, with the result that the recent upturn in house building has stopped as house-buyers find it much more difficult to obtain a mortgage."

As well as credit difficulties, Mr Berry adds the shortage of new homes has been exacerbated by failures in the planning system to respond to market demand fast enough.

Factors contributing to the growing housing demand include an increasing and ageing population, as well as divorce rates and lifestyle choices.

In a recent Inside Housing interview, group chief executive of Barratt Developments Mark Clare said he thought it unlikely builders would hit the government's target of 240,000 new homes a year by 2016.



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