The number of new homes has fallen for the fifth successive year to the lowest level for 13 years, government figures show.
Analysts say this confirms that the government is right to take action to boost the construction sector and ease the upwards pressure on prices.
Annual housing supply in England in 2012/13 rose by 124,720 new dwellings, an 8% fall on the previous year, according to figures from the Department for Communities and Local Government.
There was just 118,540 new-built homes across the year, with most of the remainder coming from conversions and change of use. Some 12,060 homes were lost through demolitions.
Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), said: “By revealing a fifth successive annual decline in net additional dwellings in England during 2012/13, these figures make it absolutely clear why the government has been justified in taking action on a national scale to reignite the construction sector.
"At just 124,720, the net supply of homes in the last year was the lowest it has been in the last 13 years – and barely half the volume seen at the peak of the market*.
“So far the Help to Buy equity loan scheme has engaged over 900 developers and prompted an impressive number of registrations from aspiring homeowners.
"While supply has slowed, there remains a great untapped demand for property among the British public. Thanks to Help to Buy, the supply figures for 2013/14 should at least begin to paint a better picture."
Williams said property homeownership levels will permanently suffer unless building supply improves. "The hopes of the construction sector are resting on the short-term impetus of Help to Buy to prompt a sustainable recovery, without which we may facing a situation by 2020 where just a third of young households own their own homes. That is little more than half the number seen in 1993.”
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