A construction sector already struggling to meet rising housing demand has been dealt a further blow – after slipping into recession for the first time in four years.

The official confirmation that output from the industry has fallen for the second successive quarter heralds a challenging time for both developers and property agents in East Anglia.

But while concerns have been raised about the slowdown, firms are accentuating the positives and presenting a 'business as usual' message, wary of further undermining confidence in the sector.

While the uncertainty of the Brexit vote may have caused both developers and buyers to delay investment decisions, other factors at play include a shortage of skilled workers and materials, as well as a struggle to find suitable sites.

Saul Humphrey, chairman of the Building Growth construction sector board at the New Anglia Local Enterprise Partnership (LEP), said: 'Unfortunately, the construction industry has a tendency to over-react to any economic uncertainty as some businesses, developers, funders and homeowners delay investment decisions, creating an inertia that can quickly manifest into an economic downturn.

'Indeed, the construction industry's economic indicators are already reflecting an immediate slump in both activity and sentiment.

'If we are to positively arrest this uncertainty, now is the time to invest in our critical infrastructure – from broadband to transport and in skills to affordable housing.'

He called on public sector providers and housing associations to respond positively by commissioning their own schemes.

Edward Parker, managing director of Bury St Edmunds-based Bennett Homes, said he was concerned uncertainty over borrowing could discourage growth.

He said: 'There was a marked slowdown in the run-up to the referendum – similar to that experienced before a general election. Going forward, there is some uncertainty over the availability of funding and borrowing which may discourage growth, particularly among small and medium-sized builders.'

However, housebuilders said there are still reasons to be positive with buoyant prices in the East and an increasing demand for homes, with the Help to Buy incentive and low interest rates meaning people should be able to borrow the money needed to get on the housing ladder.

Tony Abel, chairman of Watton-based Abel Homes, said: 'Perhaps new homes are slightly more protected against what some people perceive to be nervousness in the market because of the fact you have Help to Buy available. There is still a massive amount of finance available at low interest rates.

'It is hugely different [to the 2009 recession]. The problem was a shortage of finance, the developers couldn't borrow and house buyers couldn't buy and that is what is so very different this time.'

Figures from estate agent RightMove show house prices in the East of England have seen the biggest percentage hike in the country over the last year, with the average asking price at £334,951 – which is 8.2% higher than in August 2015. This could mean shareholders of larger developers are willing to put money into projects as there is still value for them.

But the concern among housebuilders is that this could change, causing the market to stall, with companies holding back building projects until prices rise again.

Given the shortfall in the number of homes being built across the region last year, Mr Abel said the demand was still high for new properties.

'I understand fewer used homes are coming on to the market at the moment as people aren't quite sure what they should do. But this hasn't affected new homes. We are building as quickly as we can. The fact there is a shortage of skilled labour and some material shortages shows we are going flat out.'

What do you think? Email doug.faulkner@archant.co.uk