The latest data has revealed that housebuilding continues to fall behind commercial and civil engineering activity with respondents commenting on ‘subdued market conditions’ and a ‘headwind to activity’ from cutbacks to new-build projects.

The findings also revealed a decline in new order volumes for the second time in three months, with the decline — despite being modest — the steepest since May 2020 according to the report.

Despite the downturns, UK construction companies recorded a marginal increase in total business activity throughout August.

The government has put a significant emphasis on the need to build more homes across the country, with the Conservatives pledging to build one million houses by the end of its parliament term.

According to developers Stripe Property Group, the government would need to build a further 405,195 new homes at a rate of 67,532 per quarter to fulfil its targets.

Development professionals gave DFT their views on the latest research.

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Brian Berry, CEO at the Federation of Master Builders, commented: “While it will come as welcome news to many in the construction industry that the sector saw growth in other areas, the continued steep downturn in housebuilding rates remains a major concern.

“Having taken the decision to only have 300,000  homes [a year] as an ambition not a target, the government needs to set out a clear plan for housebuilding to demonstrate that it is committed to substantially increasing housing supply.

“The sad fact is that the housing market in this country is in crisis and has been for a long time — the lack of a visible government plan to address this is deeply concerning, and creates a lack of certainty, both for those people desperately looking to access the housing market, and for local housebuilders looking to deliver the high-quality housing that their local communities need.”

Guy Murray, head of development finance at West One Loans, added: “I’m not surprised by the latest figures, this just illustrates the knock-on effects of continued aggressive interest rate hikes by the Bank of England.

“The consequences of reduced affordability for homebuyers are a slowdown in housing sales and subsequently housebuilders will bring less stock to the market while these conditions persist."