New home building at lowest since 1924

Homebuilding in Britain has fallen to an 84-year peacetime low, with forecasts that it could slump even lower in 2009.

Just 135,000 new homes in the private sector were started this year, down from 203,500 last year, according to figures from the Construction Products Association and Ernst & Young.

It is the lowest number during peacetime since 1924, when there were 87,000 new starts.

There are fears that housebuilding could grind to a virtual halt in the new year as more developers pull out of schemes or mothball them, while they wait to sell existing stock.

The number of new home reservations has halved in 2008, and an increasing number of buyers who have made an initial deposit are walking away from their purchases because they do not want to buy in a falling market.

Construction firms have laid off tens of thousands of workers and are forecast to cut more jobs next year as the housing market continues to slump.

Housebuilders, including Persimmon and Bovis, who had been expecting an upturn next year, are now believed to be refinancing their debts in anticipation of 2009 being likely to show no recovery.