Spokesman Roger Humber commented: “House builders are not going to be starting new sites, they”re going to be laying people off, they may even be mothballing sites.”

The lack of new homes may be to the advantage of those with Buy to Let Mortgages, as those looking to get on the housing ladder may have less choice and could opt to rent instead while they wait for the market to pick up again.

Last week the Financial Times blogger Jim Pickard said government targets for over 200,000 new homes to be built each year were looking “increasingly hallucinogenic”.

This compares with a figure of 170,000 for 2007 and is the lowest number of newbuilds to be constructed since 1945.

Mark Clare, chief executive of Barratt, said: “The small guys have pulled out and the big companies…are not opening new developments.
“I think it certainly will be around 100,000 and if there’s a further deterioration, it will go under 100,000″.

Mr Clare’s sentiments were echoed by Alan Cherry, chairman of Countryside Properties, who identified the affordable housing sector as set to be the hardest hit, with builders scrapping plans to construct these properties as they “move to protect margins”.

The slowdown is predicted to limit the likelihood that Gordon Brown’s target for new homes will be met.

Mr Brown has set a target of 280,000 new homes to be built every year, which it is claimed are needed to house the three million new households expected by 2018.

The Centre for Cities (CFC) has claimed that the government has focussed its policies unduly on homeownership and that conversely not enough attention has been paid to ensuring there are enough homes for rent.

This has been a mistake, the body argues, because owning a home puts people who are vulnerable at a high risk of repossession.

Dermot Finch, director of the CFC, said: “The government is focusing too much on home ownership, and not enough on homes for rent.

“Demand for rented housing is increasing all the time - but supply isn’t keeping up. Unless this changes, the young and job movers will have difficulties finding somewhere decent to live.”

Some of the most deprived areas of the country are set to become property hotspots thanks to the government’s Pathfinder Funding Programme, which will see £1billion of government cash set to revitalise the property markets of 12 redundant and troubled neighbourhoods. According to Property Secrets, these areas will become more attractive to both owner-occupiers and potential tenants, and property values could escalate and accelerate above the UK average.

Five areas, including East Lancashire, Manchester and Salford, Merseyside, North Staffordshire and South Yorkshire, are guaranteed to receive more than £100 million. Other areas to receive up to £95 million, over the next three years, are Newcastle (£95m), Oldham (£90m), Hull and East Riding (£87m), Birmingham Sandwell (£53m), Tees Valley (£35m) and West Cumbria (£6m). Manchester and Salford are to receive a massive £140 million, with £52 million guaranteed over the next 12 months.

A National Audit Office study found the Pathfinder Funding Programme has succeeded in raising property values beyond the comparative levels of other regions with similar problems, which are not part of the scheme.

Huge investment

Neil Lewis, CEO of Property Secrets, said: “This is just one of the persuasive arguments why property investors should consider targeting these locations now before they start improving and their values go up.This huge investment of £1billion will breathe new life into these local property markets and contradicts reports that the UK property market, particularly for the buy to let investor, is dead.”

“The UK buy to let market is pretty stagnant right now and you really need to know what you are doing if you are considering investing – make sure any property is significantly below market value. However, these pathfinder areas represent a great investment opportunity, but it is essential to buy at the right price and we would recommend a target of at least 15% below market value.”