The demand for residential developments has hit a cold streak, adding to concerns that the recovery in the house building sector is losing momentum. The value of new orders fell 24 per cent between the first and second quarters of 2010, even though interest rates remain at very attractive levels.  Government funded house construction even fell 23 per cent.

An insider at one of the large UK house builders remarked on the near future, saying: "The picture on the ground is fairly stable at the moment but there is obviously some concern out there about what is up ahead."

Falling house prices combined with the latest house building information paints a picture of virtual certainty of the economy leaning towards a double dip recession. Although, even with other noticeable declines in growth of other significant sectors of the economy, home builders remain optimistic based on the success of the first quarter of the year.

Persimmon, the largest of the house builders in the UK, used its half year results to revise its land values to a higher amount.

Howard Archer, economist at IHS Global Insight, commented on how the house building sector relates to the rest of the UK economy, saying: "While the construction sector only accounts for 6.3 per cent of national output, the recent marked slowdown in activity adds to concerns over the economic outlook."

Noble Francis, chief economist of the Construction Products Association, the construction industry’s primary trade body, commented on the financial effects of the governmental budget cuts, saying: "The end of the Government’s fiscal stimulus and the start of the austerity cuts has affected orders within the public sector."