The property industry has warned that Prime Minister David Cameron's plan to build 200,000 new starter homes won't be enough to keep up with demand.
Mark Hayward, managing director, National Association of Estate Agents (NAEA), welcomed the announcement but said much more needed to be done. "It simply isn’t enough bricks and mortar to lift us out of the crisis we currently find ourselves in.
“We first heard this pledge in Cameron’s pre-election campaign, and we still support the sentiment.
"However, other initiatives such as the Help to Buy scheme still remain in place and it boils down to the fact that we are still waiting to see new homes being built.
“And whilst we wait capacity remains stretched, infrastructure is not in place and house prices continue to grow.”
The NAEA’s latest housing report found that sales made to first-time buyers fell to the lowest level since July 2014.
20% of sales went in first-time buyers in August, down from 23% in July and 24% in June.
Hayward says this shows that life is getting "tougher and tougher" for first-time buyers.
Charles Haresnape, group managing director, mortgages, at Aldermore Bank, said the lack of housing supply is the biggest challenge facing the housing market today.
“Until 1990, the number of homes built every year was over 200,000, but the total has only exceeded that level in four years since, between 2004 and 2007."
Haresnape said the new relaxation of strict planning regulations to encourage housebuilders to develop affordable homes is a positive development but more needs to be done.
"Initiatives such as this or proposals to free up brownfield sites are a welcome rebalancing towards more supply side measures, essential for a fully joined-up housing policy.”
Lawrence Hall of Zoopla said: “While 200,000 starter homes by 2020 sounds like an impressive figure in isolation, the UK needs this many new homes each year to address the housing supply shortage that has plagued the nation for some time and caused real issues for prospective home buyers.
“Truly turning generation rent into generation buy will be a long and difficult journey, but this announcement represents an encouraging first step.”