New homes 'should fit local needs'

Campaign group Centre for Cities warned that simply increasing the number of houses would not tackle the wide range of economic challenges facing Britain's towns and cities.

Some cities, such as Cambridge and Bristol, have problems with the number of affordable houses, while others, such as Hull, Sunderland and Bradford, need more private housing, said the report. Cities were urged to work more closely with local employers and house-builders to make sure local demand is being met.

The report said that in cities with thriving economies, many people could not afford to get on the housing ladder. It highlighted the example of a nurse in Cambridge earning £18,500 who would have to invest 11 times her salary to buy a house, well above the national average of 7.25 times.

More than two-thirds of workers in Cambridge cannot afford to buy a house and the city is facing a shortage of nurses, teachers and other professionals.

But cities with smaller economies such as Sunderland and Bradford have an opposite problem, with not enough highly-skilled workers being tempted into the area because of a lack of suitable housing. Only 0.5% of houses in Sunderland are at the top end of the council tax band so lawyers, middle managers and doctors are moving out because of a limited choice of housing.

Dermot Finch, director of Centre for Cities, said: "If we want to see the right houses in the right places, then build, build, build is not always the answer.

"It is not enough to talk about the three million target - politicians from central and local government need to understand where in Britain's jigsaw of local economies new houses should be built. It is time for cities to develop a far deeper understanding of local housing markets."

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said it is essential that house building does not completely dry up as a result of the current economic problems, which have seen thousands of jobs axed in recent weeks. "Rather than simply looking at delivering a number of units, house-building needs to be tailored to respond to local demand and housing need," he said.

Speaking on BBC Radio 4's Today programme, Housing Minister Caroline Flint admitted that building three million new houses by 2020 was going to be a "challenge".