House builders are 'justified' if they cut back on production in a housing market downturn, according to John Callcutt, the man charged by ministers with upping the delivery of new homes. Financial Times

Callcutt warned that the housing market was likely to weaken and that developers’ risk averse attitudes made sense.

'House building will not continue to deliver returns at their current level . . . the industry could be in for a bumpy ride,' he said in a report launched yesterday.

The former chief executive of English Partnerships was commissioned a year ago to investigate ways to speed up the delivery of new housing.

Callcutt said the government’s target of 3m new homes by 2010 was realistic, even with new “carbon neutral” building regulations.

Yvette Cooper, housing minister, said that this conclusion was a 'relief'.

'We all know that...we desperately need to build more homes for the next generation,' she said.

But the prospects of an imminent leap in house building have been undermined by official figures showing a house building slump in the third quarter.

'Construction orders' for private housing in the three months to September fell by 13% compared with the previous quarter, according to figures from the Department for Business, Enterprise and Regulatory Reform.