The city council wants the Scottish Government to double its funding for new housing from the current level of 36 million a year
Edinburgh City Council says it needs to build 36,600 new properties in the next ten years, including 16,600 that can be subsidised for low earners. At present it admits it is struggling to build half that number.
They say the city suffers from a West of Scotland bias when it comes to the distribution of Scottish Government money.
And banks' unwillingness to lend to people with a deposit of less than 25 per cent is killing off demand from prospective first time buyers, which is needed to fuel the house building industry.
House building in Edinburgh fell sharply from more than 1,700 in 2007/08 and 2008/09, to 1,118 in 2009/10. That lower rate has remained, with 1,182 built in the past 12 months.
Councillor Paul Edie, housing leader at Edinburgh City Council, said: "We're currently building at half the rate we need to be. Meanwhile, our estimates for the demand of affordable housing has gone up from 12,500 in 2007 - partly because of financial problems, partly because of the nature of the city."
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The council is reluctant to criticise the Scottish Government - the SNP is in power at Holyrood and is also junior coalition partners in the council - but it believes funding for affordable housing is currently misdirected.
Cllr Edie said: "South-east Scotland has 75 per cent of the demand for affordable housing in Scotland. But the balance of investment goes westwards because it is based on levels of deprivation.
"But Glasgow has a surplus of housing whereas, because of the city's economic prosperity, people want to come and work here, which means we have a shortage.
"We had 1,024 bids for one council house in Drumbrae two years ago. We normally receive in excess of 136 bids for any house that comes up."
He added: "We understand the Scottish Government has dwindling resources. But we receive 36m annually and we could do with that at least being doubled to increase building."
At present the council has to rent out properties from the private sector, which is expensive, costing 10m a year.
It also has a target to end homelessness by 2012 and, while it has fallen, 5,500 people still present as homeless every year.
The council is also hoping for a growth in lending from banks. "We need bankers to have more confidence in lenders," Cllr Edie said. "Generally, we could do with a lot more of that."
The council's report, due out today, reveal the problem. "The average income for households living in Edinburgh was 36,668 in 2009," it states."Based on this figure, a household saving 10 per cent of total pay would still need to save for nearly ten years to meet the deposit requirement of a one-bedroom property."
Edinburgh's housing shortage is part of a Scotland-wide problem. Homes for Scotland warned last week that house building needs to grow by 10 per cent over the course of the next Scottish Parliament, or the country will face a serious shortage.