A leading figure in the construction industry warned tightened controls on mortgages were damaging the housing market, Clear Property Investment has learned.

Mark Clare, chief executive of Barratt - announcing a £33 million pre-tax loss compared to £144.1 the previous year - said his company had made 'a strong start' for Autumn.

But he added: "Whilst there is some uncertainty surrounding planning and funding for social housing, the short-term impact on our business is likely to be limited. We have detailed planning consent in respect of 95 per cent of forecast completions for the year ending June 2011."

The number of completions for the firm fell from 13,277 in 2009 to 11,377. Of these 9,455 were private, and 1,870 were in the social housing sector. The company's proportion of social housing increased, albeit slightly, from 15.7 per cent of homes to 16.5 per cent.

A new government initiative, to give more control to local authorities when it comes to planning and purchasing new-builds, is also believed to have exacerbated the situation.

Meanwhile, poor sales in the buy-to-let market has resulted in more construction companies opting to build family-sized houses rather than flats.

The mood overall for construction companies is more positive than in recent months, thanks to a recovery in house building. Both market-leaders Persimmon and Taylor Wimpey remain reasonably buoyant.

Figures for the last quarter showed cuts in local authority spending were having an impact with fewer schools and other municipal buildings being built while commercial contruction also fell by seven per cent.

Howard Archer, economist at IHS Global Insight, told the Financial Times: "While the construction sector only accounts for 6.3 per cent of national output, the recent marked slowdown in activity adds to concerns over the economic outlook."

Noble Francis, chief economist of the Construction Products Association, the building industry's main trade body, said that fragile consumer confidence was putting pressure on demand for residential construction.

"Furthermore, the end of the government's fiscal stimulus and the start of austerity cuts has affected orders within the public sector," he added.

It's believed activity in the construction industry will fall by around three per cent this year. Private sector spending however, is expected to increase in 2011 with more demand for new properties.

For further information on house building, property investing and market conditions, don't hesitate to contact our Clear Property Investment team.
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