Housing crisis back at 'war levels'

SCOTLAND faces a housing shortage crisis not seen since the end of the Second World War due to the lack of construction activity.

Homes for Scotland, the industry's main body, estimates house-building has fallen 90 per cent in some areas, including Edinburgh and the Borders. New house starts in Glasgow and Fife were down 85 per cent, it added.

Homes for Scotland chief executive Jonathan Fair yesterday said it could take ten years for the number of new homes built in a year to reach pre-credit crunch levels – which even in good times were 10,000 a year short of government targets. The trade body said house-building in Scotland peaked at 25,000 houses a year, against a Scottish Government target of 35,000. Fair said lack of mortgages was one of the main stumbling blocks to recovery.

Tim Allan, director of Dundee-based Unicorn Property Group, agreed and warned that the lack of new-build houses threatened to create a "massive shortfall". He said: "We are stoking up a new housing bubble in the UK."

Allan, who said his firm sold more homes in the last quarter of 2009 than for the whole of 2008, confirmed he was keen to start building homes on the back of signs that the market was returning. But he cautioned that the problem facing housebuilders stemmed from the banks' reluctance to fund development.

"We need to see an appetite for development funding," said Allen. "We need the banks to come to market on workable terms."

Last month, Mark Clare, chief executive of housebuilder Barratt, said it would take a further seven years for the market to recover to its 2007 peaks.