House building down by a third; ECONOMIC CRISIS New homes suffer in the credit crunch.

Byline: Sam Wood 

HOUSEBUILDING in the North East is predicted to plummet by almost a third next year.

A report released by the Royal Institute of Chartered Surveyors (RICS) forecasts a 30% decline in new home builds compared with this year, as the housing market continues to slow because of the credit crunch.

RICS UK Senior Economist Oliver Gilmartin, said yesterday: "We expect housing completions to fall by around 30% in the North East in 2009 based on continued tightness in credit markets."

The downturn is likely to have knock-on effects in the construction industry and could impact on the economy of the North East as a whole, regional experts warned last night.

Peter Jordan, regional projects director at home builder Persimmon Homes said more job cuts in construction were on the cards.

Mr Jordan, who is also chairman of the Land & Planning Group of the House Builders Federation North East Region, told The Journal: "A 30% decrease sounds about right to me, things are not good.

"We have to rationalise. We are still building some homes and we have to maintain what little momentum we have.

"We have already lost 30% of our office staff and 80% of our on-site workers this year and I can't rule out more job losses.

The lack of new homes will have a knock-on for any industry which works with us. There is still huge demand for homes, but people just don't have the money to buy them.

"Until more people are able to buy homes there is just no point in building them."

So far this year, 2,690 homes have been finished, but that is predicted to fall dramatically next year.

RICS North East spokesman on the construction sector Michael Henning said: "The availability, circumstance and terms of finance have become much more difficult for developers and homebuyers alike and, inevitably, this is now starting to have a real negative impact.

"The downturn has had a dire effect on the North East market, with hundreds of people already losing their jobs and new home builders scaling back projects and developments for 2009.

"We still need more homes in the region, both for first-time buyers and executive residents. This region needs more quality housing built if it is going to continue to attract big business to the region.

"The Government simply must find a way of allowing banks to release mortgage funds and kick-starting the industry if it is to realise its ambitious housing targets and avoid further damage to the wider regional economy."

A spokesman for the North East Chamber of Commerce said: "The loss of skills to that sector could be very damaging and we could be looking at a serious housing shortage when things eventually start to pick up again.

"If there is insufficient housing when the market recovers, then prices are going to go through the roof and there could be big problems with meeting demand."

CREATIVE SUPPORT FOR CONSTRUCTION

ONE NorthEast's head of integrated regional strategy, Tom Warburton, said it was a difficult time for the construction sector but they were working on schemes to support the industry.

He said: "This month we launched a private sector projects' fund to support commercial development in Northumberland, which will help people and companies with plans to develop either office-based, manufacturing and services or tourism and leisure facilities in the Blyth, Wansbeck and Berwick areas.

"We're taking a more creative approach to our capital investments - for instance, on key sites, we may consider funding extra investigations and infrastructure to take out the risks and make it a little easier for the private sector to move projects forward .

"But we also have to look ahead to the eventual upturn - making sure the region is well-prepared to come out the other side of this difficult period. As part of this we'll be working with the new Homes and Communities Agency on addressing the challenges around housing, which is such an important part of the region's offer as a place to live and work."

We expect housing completions to fall by around 30% in the North East in 2009