Office building also hard hit although public projects on the rise, according to CPA activity barometer

The number of homes being built in the UK has fallen to its lowest level since 1924, putting further out of reach the government's target of building 3 million new homes by 2020.

Only 135,000 housing starts have been recorded this year, down from 203,500 in 2007, according to a report published today by the Construction Products Association (CPA) and Ernst & Young.

Their construction activity barometer report for the fourth quarter of 2008 also indicated a continuing downturn in commercial property, predicting a 24% fall in office construction next year.

Although this will be partly offset by increasing public sector spending on construction projects, this is not expected to be enough to stop construction output “falling considerably” over the next two years.

Michael Ankers, chief executive of the CPA, said: “What is of particular concern is that the situation has deteriorated significantly in the last few weeks. However, we are not an industry that is turning to government for subsidies, but are looking for increased government investment which will sustain employment and economic activity whilst delivering projects that will benefit the UK in the long term.”

He added that the CPA has written to the government with a range of proposals for urgent consideration. “These include addressing the problems of liquidity and credit, reigniting the housing market, improving the energy efficiency of the existing housing stock and reducing the regulatory and fiscal burden on industry,” said Ankers.