New homes target 'will be missed'

The global housing slowdown has hit house builders

The number of new homes built this year will be under half that promised by Prime Minister Gordon Brown, the House Builders Association has said.

The body says only 110,000 are likely to be built by end of this year, far short of Mr Brown's target of 240,000. That could fall to just 80,000 in 2009.

The association said the construction industry was facing its toughest time since the 1930s.

Housing Minister Caroline Flint said she was monitoring the situation.

Ms Flint said: "I don't underestimate the challenge that house builders are facing and clearly the number of homes being built this year has gone down.

"We're watching closely to see and listen to different forecasts about what might happen in the next 12 months."

'Financial crisis'

Mr Brown made building more houses a top priority when he took over as prime minister last year.

House builders are not going to be starting new sites Roger Humber House Builders Association

But Roger Humber, from the House Builders Association, said the construction industry was in an unprecedented slump.

"We've not seen anything like this post-war," he said. "It's essentially a financial crisis, more like 1931 than anything else that we've seen.

"House builders are not going to be starting new sites, they're going to be laying people off, they may even be mothballing sites.

"It really is on a scale we've not seen before."

The association's prediction follows a week in which shares in major construction companies tumbled, and last month, two of the biggest construction firms, Taylor Wimpey and Bellway, announced major job losses.

Many in the industry are now asking for a cut in interest rates and a stamp duty holiday to give construction a boost.

Andrew Teacher, from the British Property Federation, told the BBC that investment for new homes would only be found if the UK switched from an owner to a rental model of housing.

"What we could actually see is the big investors coming in, buying up properties en masse or building new properties to rent.

"And we could actually adopt a model similar to the one that we have for commercial property where we have offices and shops let by big developers and they're purpose built."