House building target 'in doubt'

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The National Housing Federation said unless radical action was taken immediately, only around 1.6 million new homes would be built by 2020, well short of the Government's target of three million.

Instead the group, which represents England's housing associations, said it could take until 2029 to reach this level of new properties.

David Orr, chief executive of the Federation, said: "The Prime Minister was both brave and right to put the dire need for new housing centre-stage, and make it a national priority, when he took office last summer.

"However, with the global credit crunch worsening, and conditions getting tougher for all house builders, it is time to recognise that the very commendable 2020 target is now almost impossible."

The private developer sector, which traditionally builds around 75% of new homes, has been badly affected by the property market downturn, with the number of new homes being built plummeting.

Estimates suggest the number of new properties built this year could be as low as 100,000, well down on last year's figure of 167,577, and future targets of 240,000 a year.

Speaking at the Federation's annual conference in Birmingham, Mr Orr warned that unless ministers intervened, the number of new homes being built was likely to stay at around 100,000 to 110,000 in the short-term, before rising to 160,000 in the long-term.

He said housing associations built 30,677 homes last year, but with the right level of Government support, this could be more than doubled to 70,000 a year by 2011, significantly boosting the chances of the Government's target being met.

But he warned that with the cost of private finance rising, it was becoming increasingly difficult for housing associations to raise the money they needed for building, both privately and from their own resources.