Rics casts doubt on housing target

Thursday, 24, Jan 2008 11:56

The Royal Institution of Chartered Surveyors (Rics) has cast doubt on the government's ability to meet its ambitious new homes targets.

Prime minister Gordon Brown announced last year the government would build two million new homes by 2016, with three million complete by 2020.

As part of the targets all homes built after 2020 would be carbon neutral, with ten eco-towns comprising a proportion of the completed properties.

However, Rics argues a slowing housing market has dampened confidence in the profit outlook of the UK construction industry, substantially reducing the chances of success in meeting the targets.

According to research from the organisation growth in construction workloads eased back in the fourth quarter of 2007 as businesses and house builders were hit by the continuing effects of the credit crunch and demand for housing falling away.

Only 16 per cent more chartered surveyors reported a rise than a fall in the fourth quarter of last year, down from 17 per cent in quarter three.

Meanwhile, new enquiries for housing grew at the slowest pace since 2006.

"A slowing housing and commercial property market, following the credit crunch and the Northern Rock turmoil have started to hit the construction sector," said Rics senior economist David Stubbs.

"Current financial instability is rocking market sentiment and may see the industry enter a period of uncertainty."

The Rics research also finds the outlook for profit remains gloomy with surveyors continuing to expect below average profit margins.

Equally, confidence that workloads will increase has fallen for the fourth consecutive quarter, although it remains above the survey's long run average.

"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," concluded Mr Stubbs.