The number of homes being built tumbled last month at the fastest rate since the early days of the pandemic.
At the same time, house price inflation slowed, from 1.2 percent to 0.8 percent, according to the Halifax.
That pegged the average home cost to £287,880, just up from £285,660 in February. S&P/CIPS analysed the residential construction sector in their PMI (Purchasing Managers’ Index) using data from supply chain managers and hundreds of companies.
It plunged from 47.4 to 44.2 in March – a score above 50 indicates a sector is growing, while a score below points to contraction.
It was the sharpest dive since May 2020 and was the fourth consecutive month scoring under 50.
The slump has been blamed on high interest rates pushing up borrowing costs for developers – and a slowdown in new projects.
It contrasts with the growth in the civil engineering and commercial construction sides of the sector.
They had PMI scores of 52 and 51.1 respectively. S&P economics director Tim Moore said: “A sharp and accelerated decline in house building was the main area of concern in March.
“Cutbacks to new residential projects in the wake of subdued demand, and rising interest rates, contributed to the sharpest fall in housing activity across the construction sector for almost three years.”
Kim Kinnaird, director of Halifax Mortgages, said that all parts of the country saw house price growth rates fall in March, with the exception of London and the North East.
And higher mortgage costs means that the slowdown will continue during 2023.
She said: “While the path for interest rates is uncertain, mortgage costs are unlikely to get significantly cheaper in the short term, and the performance of the housing market will continue to reflect these new norms of higher borrowing costs and lower demand.”
Across the last 12 months, Northern Ireland had the strongest house price growth – up 4.9 percent to £186,459 – followed by the West Mids, up 3.8 percent to £248,308.
In London, it nudged up just 0.1 percent to £537,250.
