The Government's ambitious target of building three million new homes by 2020 could be missed by up to nine years unless ministers intervene further in the housing market, a leading expert warns today.

National Housing Federation (NHF) Chief Executive David Orr issued a stark warning at the ICC, in Birmingham, when he addressed the annual conference of the Federation, which represents England's housing associations.

Mr Orr believes that unless radical action is taken immediately only around 1.6 million homes will be delivered by 2020. Based on those figures, the three million target figure may not be reached until 2029.

Mr Orr 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.

"He is rightly aware that too many people are living in cramped and unsuitable conditions and that more than five million people will soon be on waiting lists for social housing.

-- Advertisement --

"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 climate for house building has changed beyond all recognition, for both private developers and social house builders. The number of homes being built is falling, and we need the Government to take further action to put the programme back on track.

"We have already worked closely with ministers to introduce a mortgage rescue scheme. We now need the Government to be even more radical, and housing associations to be even more creative, to deal with the changed market. If we get this right, housing associations could be in a position to lead the recovery in house building."

Mr Orr said that the private developer sector, which traditionally builds around 75% of new homes, has been badly damaged by the current market downturn - with the number of new privately built homes plummeting.

Under the Government's original plans, it was expected that housing associations would build around one third of the new homes. While the social housing sector is the only one currently building more homes year-on-year, Mr Orr said that this is set to change.

Historically, housing associations have funded the building of social homes by raising more than £1 privately, for every £1 provided by central government. It has been the most successful public-private partnership in the economy.

However, with the cost of private finance rising, and the market becoming more unpredictable, it will be harder for housing associations to raise money privately, and from their own resources.

(CD/JM)