Number of new homes set to increase but 'will still not be enough'

New houses under construction. Savills forecasts private developers will provide the bulk of properties, building 91,000 homes this year. Photograph: Matt Cardy/Getty Images

The number of new homes will fall well short of the estimated 240,000 needed every year to meet demand, according to forecasts from estate agency Savills.

The number of new homes built every year in England is set to increase by 55% over the next five years as the economy improves and housingmarket activity spreads beyond London, the agency says, with the number forecast to increase to 167,000 a year by 2018, up from the 108,000 completed last year.

However, it says even these figures are a "best-case scenario" based on "robust assumptions" of 8% annual growth in private sector building, a rate only seen for periods of the 1980s and 1990s.

Private developers will provide the bulk of the properties, with Savills forecasting they could build 91,000 homes this year, rising to 123,000 in 2018. The numbers of homes created by housing associations and local authorities are predicted to grow to 34,000 and 10,000 respectively. In 2013, councils built only 1,360 homes – although even that was an increase from a low point of just 60 in 2000.

Private developers have been buoyed by the first stage of the government's Help to Buy scheme, which offers buyers a 20% interest-free loan to enable them to purchase a new-build property with just a 5% deposit. The scheme was launched in April last year and,

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in its first nine months, almost 13,000 homebuyers used it. The government has also made moves to make it easier for councils to build, including the relaxation of rules on borrowing.

Susan Emmett, Savills residential research director, said: "We have made some robust assumptions about increase in output from both the private and public sector. It is worrying that even a best-case scenario is still not good enough to meet our housing need."

Even at the top end of Savills' forecast, private sector construction would be below the 203,320 homes delivered by developers in 1968 when building peaked; it would also be below the 154,210 new homes created in 2007 before the housing market ground to a halt.