The slump in the housing market and the rapid downturn in the commercial property market has left the construction industry struggling with its lowest level of order books in a decade, new figures reveal today.

Britain’s surveyors expect the construction industry to suffer falling profits for the year ahead, the first time sentiment has turned negative since the winter of 1998, according to the latest quarterly report from the Royal Institution of Chartered Surveyors (RICS).

During the first three months of this year nine per cent more surveyors reported a fall than a rise in private sector housing workloads, reversing the positive 16 per cent figure recorded in the final quarter of 2007.

The news adds weight to fears that the Government will miss its official target of building 240,000 new homes a year by 2016. One of Gordon Brown's first pledges when he took over as Prime Minister last summer was to build three million homes in England by 2020.

The 12 month rolling rate of new-home starts totalled 166,820 at the end of December, a 6 per cent decline from the rate at the end of 2006. Today's construction figures indicated that new-home starts have fallen back sharply since December.

David Stubss, senior economist at RICS said: "Private residential workloads are now shrinking as home builders react to challenging conditions in the housing market by reducing the number of new homes under construction."

Housing workloads have been hit hardest in the north of England but the prolonged credit crunch has over the past few months also hit London, the South East and Northern Ireland leaving workloads there flat over the first quarter of 2008.

These areas of the country were the only regions to enjoy strong house price growth last year but a slew of reports from banks predicts prices to fall this year and housebuilders have started to rein in development of new sites.

Mr Stubbs added: "This emphasises the difficulty that the Government will have in encouraging higher house building levels during periods when the housing market is soft."

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