The housebuilding sector got a welcome boost today amidst the economic gloom as the Office of Fair Trading ruled that it was ‘broadly competitive.’

However the industry agreed to develop a code of conduct by 2010, to cope with continuing faults or delays for homebuyers.

The report found that housebuilders did not ‘landbank’ or restrict supply in order to increase prices.

John Fingleton, OFT Chief Executive, said: 'We have found the homebuilding market to be generally competitive, with no evidence that individual homebuilders have the ability to restrict supply in order to inflate prices or to hoard land for anti-competitive reasons.

'However, we have concluded that homebuyers need more protection when buying a new home and we have worked hard with the industry to help it develop a new approach to self-regulation that will improve consumer protection.

'We believe that this measure will position this important sector of the economy to provide better levels of consumer satisfaction, with long term benefits to the industry and consumer alike.'