The Office of Fair Trading (OFT) has announced plans this morning to investigate the housebuilding industry to ensure competition is healthy.

A statement from the regulator this morning asserted that it is concerned that the market "may not be working for consumers".

John Fingleton, chief executive of the watchdog, commented: "This is a hugely important market for the economy because of its substantial economic impact and because unresponsive housing supply hinders labour mobility, constrains economic growth, and harms consumers."

The OFT plans to work in coordination with the industry as it carries out its evaluations, although its efforts to ensure the best interests of consumers are being met could result in a reference to the Competition Commission.

The investigation follows the Baker Review of Housing Supply, which recommended an easing of planning laws to facilitate the construction of more new homes.