The number of new homes built in England in 2009/10 could slump to its lowest level since 1921 - with two thirds of all new properties being supplied through housing associations, new research has revealed.

The National Housing Federation (NHF) predicts the number of new homes built in England during the next financial year could slump by 50% to just 70,000 - as beleaguered private developers mothball hundreds of developments across the country during the recession.

For the current financial year, around 140,000 homes are expected to be built in England, but the downturn could see that figure halve over the next 12 months to its lowest level since 1921, excluding the war years.

The NHF says that its latest forecast strengthens the case for a house-building fiscal stimulus package - proposed by a range of organisations, including the Federation, two weeks ago.

Under the terms of the package, the Government would fund the building of 100,000 affordable homes over the next two years, at a cost of around £6.3bn - which could save thousands of jobs and provide a massive shot in the arm to the economy.

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According to the Federation's latest forecast, housing associations are expected to prop up the ailing house-building industry in 2009/10 by building up to 45,000 desperately needed new homes for rent, or low cost home ownership.

Not-for-profit housing associations remain optimistic that they will be able to build through the downturn - by making use of government grants and investing their own finances to fund developments.

But with waiting lists for affordable housing expected to hit five million next year, the alarming decline in the overall number of new homes being built could plunge the country into a deep housing crisis.

Despite the Government's commendable target of building three million new homes by 2020, the credit crunch and the subsequent recession has seen house building falling rather than increasing.

While the Government wants 240,000 to be built by all sectors every year by 2016, the number of new homes built in 2008 was around 142,000 - 33,000 fewer than in the previous year.

Along with other members of the newly-formed 2020 Group, the Federation, which represents England’s housing associations, has called on the Government to implement a house-building fiscal stimulus package through which £6.3bn of government money would be invested to pay for 100,000 new homes.

NHF Director Ruth Davison said: "After years of boom, the house-building industry is lurching towards bust - with a very real possibility that the number of new homes built in 2009/10 could slump to the lowest level since the 1920s.

"Housing associations are continuing to build through the downturn and we remain optimistic that our members will be able to maintain and even increase the supply of desperately needed social homes.

"But with waiting lists for social housing expected to hit five million by next year and the house-building industry on its knees, we need ministers to commit £6.3bn to the building of 100,000 new social homes over the next two years as part of a fiscal stimulus package."

(CD/JM)