Statistics released by NHBC show that there was a significant drop in private sector activity during the three months from April to June 2008, with the number of new homes started in Scotland down by 46%.

In April - June 2008, the number of new homes begun in Scotland was 3,043, down from 5,590 the previous year. Across the UK, applications to start new homes totalled only 20,973, a decrease of 51% on the same three-month period a year ago (42,485).

Housing association registrations also fell during the second quarter of this year, with applications totalling 9,018 - 13% less on the same period a year ago (10,403).

Imtiaz Farookhi, NHBC Chief Executive, said: "Our latest figures show that the effects of the downturn in lending and the pressure on house prices is continuing to impact heavily upon the private house-building sector.

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"Results for the first half of this year show that we received 50,110 applications from private sector housebuilders to start new homes, 42% less than on the same period a year ago (86,418).

"Regionally the biggest percentage decline in new home starts during the second quarter was seen in the North West and the West Midlands, where our figures show a year-on-year decrease of 58 and 57% respectively.

"Greater London was the only region to experience an increase in new home starts (eight per cent) during the period, where it appears that there is still a strong demand for new homes which is keeping market confidence slightly higher."

The total number of new home completions also fell during the second quarter of 2008. NHBC statistics show new build (private and housing association) completions totalled 44,548 in the three months to the end of June - 12% lower on the same period last year when 50,721 new homes were completed.

First time buyers found their ability to buy recovered slightly in the second quarter of 2008. NHBC's first time buyers' ability to buy index increased by seven points during the quarter to 57. The index is based on a formula which takes into account the average cost of homes bought by first time buyers, average income and mortgage interest rates (from the Nationwide Building Society). The higher the index, the greater the ability to buy.

(GK/JM)