Housebuilders have welcomed a report compiled for the DETR that has called for an additional 1.1 million homes to be built in the South-east by 2016.

Projections from local authorities in the South-east had estimated that the number of new homes required would be 668 000, but an expert panel commissioned by deputy prime minister John Prescott has insisted that the growing level of economic activity in the South-east means that additional homes are needed.

Redrow group managing director Paul Pedley said additional homes offered the best means of preventing overheating in the region’s market and would ensure that interest rates remained low.

Pedley said: “It’s ironic, but the simple way to resolve the problem of overheating in the South-east housing market is to bring more homes on-line. It’s supply and demand.

“If we don’t sort out the supply and demand equilibrium, the Bank of England will raise interest rates as it did last month to prevent overheating in the South-east. What that says is: we don’t have enough land for homes and we’ll clobber manufacturing.”

The simple way to resolve overheating in the South-east housing market is to bring more homes on-line

Paul Pedley, Redrow

However, environmental groups reacted with anger to the figures, and the report’s recommendation that greenfield land on urban peripheries be developed. The report also recommended that the government cut its commitment to build 60% of new

homes on brownfield sites in the South-east by 10%. The groups have accused the government of hypocrisy following the publication of Lord Rogers’ urban taskforce report, which called for an urban renaissance in Britain’s cities.

Assistant director of the Council for the Protection of Rural England Tony Burton, who was a member of the taskforce, said:

“The government’s approach to planning has been shot to pieces.” He added: “It proposes a level of development which the urban taskforce concluded could not be contemplated.”