The value of social housing construction projects starting on site in the second quarter was 40% lower than a year ago according to the latest Glenigan Index. The upward trend seen earlier this year in private housing has also petered out with the value of start on sites down two per cent on a year ago as housebuilders and consumers reappraise market conditions post-election. Overall these declines leave the Glenigan Residential Index down 20%.

Allan Wilen, economics director, Glenigan, said: "Whilst social housing starts are likely to remain under pressure over the coming months, a renewed recovery in private housing starts is anticipated at the end of the year as housebuilders capitalise on gradually improving market conditions."

"Private housing had previously been a source of optimism, as returning private sector confidence encouraged developers to invest in new work. However, this quarters dip in project starts highlights the fragility of the recovery. Poor household earnings growth and rising unemployment, combined with limited mortgage availability are expected to restrict the pace of recovery in new house sales and project starts during the remainder of 2010."