The number of new homes built in England and Wales in 2009/10 will slump to its lowest level since 1923, fuelling fears that a chronic shortage of housing will leave millions of people trapped in overcrowded and substandard housing for a generation to come, the National Housing Federation has warned.

The Federation has forecast that house-builders are on course to build just 122,700 homes between April 2009-March 2010, 18,000 fewer than were built over the previous financial year, as a result of private developers scaling back developments following the onset of the recession.

The house-building figures for 2009/10 will be the lowest total since 1923/4, when just 86,000 homes were built, if the war years are excluded. It will be the second successive year that numbers have fallen significantly, after 2008/9 saw only 140,950 homes built, compared to 176,660 the year before.

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The building of homes this year has been propped up by housing associations, who are set to build over 45,000 homes in England by April this year – with the aid of record levels of public investment and more flexible government grants via the Home and Communities Agency. This will be the highest total achieved by the affordable housing sector for a decade.

A record 4.5 million people in England are stuck on housing waiting lists and rising unemployment and repossessions has further fuelled demand for affordable housing during the economic downturn.

The Federation says that unless spending on housing is ring-fenced, the consequences will be dire for millions of families stuck on housing waiting lists.

Federation chief executive David Orr said: "The number of new homes built during 2009/10 is set to hit an 87-year low, plunging the country into the worst housing crisis for generations.

"The delivery of new homes this year has been propped up by housing associations, who have built just under half the total number – with the aid of record levels of public investment and more flexible government grants via the Home and Communities Agency.

"With record housing waiting lists and overcrowding reaching epidemic proportions in many places across the country, the need for more affordable housing has never been greater.

"The three main political parties must demonstrate their commitment to helping the millions of Britons in desperate need of an affordable home by pledging to safeguard investment in housing – and giving it the same priority as health, education and policing."

(CD/GK)