UP to 120,000 extra new homes need to be built each year to keep pace with rising demand, a Treasury-commissioned report has found.Kate Barker, a member of the Bank of England's Monetary Policy Committee, said between 70,000 and 120,000 new homes needed to be built annually in England alone for the next 10 years on top of current levels, to meet demand and make property more affordable for first-time buyers.

UP to 120,000 extra new homes need to be built each year to keep pace with rising demand, a Treasury-commissioned report has found.

Kate Barker, a member of the Bank of England's Monetary Policy Committee, said between 70,000 and 120,000 new homes needed to be built annually in England alone for the next 10 years on top of current levels, to meet demand and make property more affordable for first-time buyers.

She added that up to 23,000 more social homes also needed to be built each year to meet new demand and make inroads into the current backlog, at a cost of up to £1.6 billion.

The East of England Regional Assembly recently agreed draft plans for 58,600 new homes in Suffolk by 2021.

The proposals also include 131,000 new homes for Essex and nearly 500,000 across the entire eastern region.

It led to fears of precious countryside being lost and a negative impact on public services.

Ms Barker said yesterdayduring 2001 the number of new homes built fell to its lowest level since the Second World War, and just 125,000 were built in the 2002/2003 tax year.

This shortage is leading to property becoming increasingly unaffordable, with only 37% of new households in England able to afford to buy a house in 2002, compared with 46% in the late 1980s.

Ms Barker said unless the current rate of house building was addressed there would be increasing problems of homelessness.

She said that while the level of new build she was suggesting would have some implications for the environment these would not be "extreme", and it should be possible to build 60% of homes on brown field sites in line with Government targets.

She said: "If you did all this building in the South East, which I am not recommending, over 10 years it would take up just 0.75% of the land area."

Ms Barker added that if satisfactory progress had not been made on this within three years, she suggested the Office of Fair Trading should carry out a wide-ranging review.

Henry Oliver, head of planning at the Council for the Protection of Rural England, said: "Our plea to the Government is not to rush into this, but to debate and think it through instead.

"Such an increase certainly risks consuming huge areas of valued countryside, in a country which is already the most built up in Europe - spreading urban sprawl and neglecting the huge need and opportunity for urban regeneration."