The bodies running the government’s £2.2bn housing market renewal initiative are being forced to scale back plans because of the recession, the Audit Commission has said

The government spending watchdog claimed the market downturn “could not have come at a worse time” for the Pathfinders programme, which was designed to regenerate areas with many empty properties that people were not buying.

The pathfinder agencies built 7,000 homes under the scheme in 2008/9, but the Homes and Communities Agency, which is in charge of administering funding, is revising targets.

Yvonne Taylor, head of housing markets at the Audit Commission, said: “Plans will have to be adapted. Nobody’s unaffected by the market.”

The pathfinders are considering other options, including refurbishing older stock rather than building new homes, and making more homes into social housing.

John Glester, chair of the NewHeartlands pathfinder in Liverpool, said: “We’re reviewing all we’re looking to do in the light of current housing outturns. In the longer term we are still looking at building what we intended, but there is a short-term impact.”