House building slumps 20 per cent in capital

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A little more than 5,000 new properties were started in the capital in the three-month period from May to July of this year. Almost 6,500 were started in the same period last year, according to the National Housebuilding Council.

Nationwide, the number of applications to start building homes fell by almost half for the same period, from 52,907 to only 28,086.

The decline leaves government hopes for an additional three million new homes in disarray.

Private house building was the hardest hit, falling 58 per cent. New housing association housing projects, which do not depend on mortgage lending, fell by five per cent.

The figures also record house sales, showing that in May to July an average of 477 homes were sold daily in the UK, a fall of more than 21 per cent on the same time last year.

NHBC chief executive Imtiaz Farookhi said: "With poor demand continuing to affect building activity severely on sites, we welcome the Government's package of measures to re-energise the housing market, including interest-free loans for first-time buyers, which should go some way to restore consumer confidence.

"However, the success of these measures will be short-lived unless urgent action is taken to increase mortgage lending."