The Local Government Association claims that, in the next two years, a million more people will be on the waiting list for social housing. About four million are already waiting for a council or housing association home, and the LGA says that the high cost of house buying, a lack of credit and curbs on the number of homes being built will push the figure up to more than five million. It is calling on councils which are struggling to meet demand for social housing to be given greater freedom to borrow and remortgage assets to invest in housing stock.

Conservative leader David Cameron launched his party’s Homelessness Foundation yesterday, saying that it is a ‘disgrace’ that people are sleeping on Britain’s streets. The foundation has been set up for the Conservative Party to ‘get back to its roots’; look at the causes of homelessness such as poverty, mental illness, unemployment and housing shortage; and come up with solutions to ease the problem. Mr Cameron has proposed greater links with the voluntary sector, and has offered to ‘hopefully put things into practice straight away’ after the party won the majority of councils and London mayoralty in the recent local elections.

Communities and Local Government figures on house building in England show that the number of new starts has slumped to its lowest level for nearly a decade. There were 32,100 new housing starts in England in the first three months of the year ,which was 21 per cent lower than the previous quarter and 24 per cent down from a year ago. The greatest drop has been among private house builders.

Yesterday’s announcement by the Bank of England that ‘worse is to come’ with inflationary pressures prohibiting further interest rate cuts, sent the Libor (interbank lending) rate up for the second day running. Until Wednesday, the rate had been falling for three weeks. After the Bank’s inflation report was released, three-month sterling Libor increased to 5.84 per cent, pushing the average rate for a two-year loan to 6.64 per cent, its highest  for eight years.

In a draft version of the Queen’s speech yesterday, Gordon Brown announced a £100 million ‘leg-up’ on the property ladder for first-time and low-income house buyers. For the first time, these groups will be able to buy new homes through a shared ownership scheme that had previously been limited to key workers. Anyone with a household income of less than £60,000 will be eligible. A further £200 million fund would also be made available to allow unsold new homes to be sold to housing associations. These homes would then be rented to tenants. The PM said: ‘our immediate priority… is to help family finances’. The Conservatives accused the government of taking many of the tories policies.

While Mr Brown said that he was the right man to steer the country through the difficult economic times ahead, governor of the Bank of England Mervyn King warned that there was worse to come. Households should tighten their belts even further in the wake of soaring energy bills, food prices and imports, said King. ’For the time being at least, the nice decade is behind us’ he said, and added that the housing market will continue to fall after worsening ‘markedly.’

The Office of Fair Trading (OFT) is to launch a probe into whether people facing repossession are adequately protected in sale and rent back schemes. Since ROOF’s investigation into the schemes, where households in difficulty sell their house at a discount to investors and in return become a tenant in the house with the option of buying it back at a later date, more and more consumer groups and charities have called for regulation of the schemes. It is estimated that 20,000 people sell their homes to mortgage companies each year. The OFT is expected to report on its findings by September.

First-time buyers are increasingly looking to intermediaries to help them get a mortgage according to the Association of Mortgage Intermediaries (AMI). More than 82 per cent of first-time buyers used an intermediary in the first quarter of 2008, which is a 10 per cent rise from the previous year. Figures also show that intermediaries are responsible for 79 per cent of the all remortgages, also up 10 per cent from the same period in 2007.

And finally, in London most would-be homeowners are now facing a catch-22 situation. As mortgage finance dries up and many first-time buyers are unable to get a mortgage, rents are increasing faster than inflation meaning that people cannot save enough for a deposit on a property. The figures, compiled by Winkworth, show that rents have increased by an average of around 8 per cent compared with last year. For two-bedroom flats the increase has been up to 15 per cent in some areas. Winkworth estimates that rents will rise by a further 5 to 10 per cent over the coming year.

Housing minister Caroline Flint accidentally revealed that experts believe house prices could fall by ‘at best’ 5 to 10 per cent, and they also expressed concern over meeting the target of three million new houses. Photographed carrying notes into a Cabinet meeting at No10 yesterday, Ms Flint has shrugged off the incident and insisted that the notes reflected expert analysis, rather than government forecasts. Shadow housing minister Grant Shapps said it showed that ministers were painting one housing market scenario in public and the exact opposite ‘behind closed doors’.

After Redrow yesterday, today Barratt Developments has reported falling sales and rising cancellation rates as conditions in the market deteriorate ’significantly’. Barratt said that  the ‘unprecedented’ drop in mortgages and lower consumer confidence had brought reservation rates down by a third against the same period last year, while cancellation rates have been running at about 25 per cent since the beginning of the year, and currently rising.

Hopes of interest rate cuts are in doubt as inflation rises to 3 per cent. The soaring costs of food and fuel has triggered the largest jump in inflation for six years, and analysts are now saying that rates may need to be kept on hold (at 5 per cent) for the rest of the year.

Meanwhile, Bradford & Bingley is raising £300 million in an emergency rights issue this morning to shore up its balance sheet on mortgage accounts. It is only a few weeks since B&B denied a report that it was contemplating a rights issue. In answer to why B&B did not announce the rights issue with its interim statement on 22 April, the chief executive said that a ‘month makes a big difference’ and it was a more stable environment now to make the announcement. Alliance & Leicester is set to pull £14 billion of capacity from the mortgage markets after its balance sheet fell £1.5 billion in the first four months of the year, reducing an already under-funded sector, and heaping more misery on first-time buyers.

And finally, falling house prices are making it harder for couples to divorce. Where the family home is a couple’s main asset it will usually have to be sold as part of the settlement, but with mortgages becoming hard to come by and many buyers holding off in the hope that prices will fall, properties are harder to sell and some couples are putting off divorce proceedings.

According to the Council for Mortgage Lenders, mortgage lending fell during the first quarter of 2008 to its lowest level for more than three decades. From January to March, new mortgages slumped to 142,000, below the 146,000 recorded in early 1992 when Britain was in recession. Remortgaging has remained ‘resilient’, actually increasing in the first quarter to its highest amount for three years, but CML has put this down to the large number of borrowers coming off short-term fixed rate deals.

The latest survey from the Royal Institution of Chartered Surveyors shows that the number of surveyors reporting a fall in property prices has risen for the ninth month in a row. Meanwhile the number of house sale completions during the past three months has fallen significantly, with an average of 18 sales per surveyor. A RICS spokesperson said that there are ‘very real implications, not just for the property industry but also for the high street and the wider economy’.

Housebuilder Redrow and Northern Rock have both added to the financial gloom. Redrow has reported rising cancellation rates as its order book is down 26.5 per cent from a year earlier. The housebuilder said sales and prices have come under pressure as a result of the tough market conditions and the restrictions on mortgage financing. While recently nationalised Northern Rock has seen the number of homeowners in arrears nearly double. The number of mortgages in arrears for at least three months stood at 0.95 per cent of the total lending, up from 0.57 per cent at the end of December.

A shortage of skilled construction workers is jeopardising ministerial targets to build three million new homes, revamp schools and deliver the Olympics facilities. After surveying 1,200 companies, the Chartered Institute of Building indicates that nine in ten employers report a skills shortage, with four in ten saying that skilled manual trades were ‘very difficult’ to fill. The majority of companies said that the situation was likely to worsen this year.

And finally, Gordon Brown has proposed an ‘age insurance’ scheme to safeguard the elderly as he launched a consultation into care. The scheme is intended to address the ‘black hole’ in public finances caused by increased life expectancyand is likely to involve compulsory payments throughout an individual’s working life, which would be spent on care during old age or infirmity. Health Secretary Alan Johnson said that pensioners should not have to sell their houses to pay for nursing home care.

From tomorrow, Halifax, the UK’s largest mortgage lender will force borrowers with small deposits who do not use a broker to open current accounts before they can get a mortgage. The move is seen as an attempt to boost the bank’s cash deposits. A spokesperson for the bank said that ‘wholesale money continues to be significantly more expensive than a year ago. Unfortunately this increased costs needs to be passed on to new customers’.

BBC research has found that more people want house prices to fall than to rise - 28 per cent compared to less than a quarter of those polled, with most people wanting prices to stay the same. More than 60 per cent said that a price fall of more than 10 per cent would not make them any more likely to cut back on household spending. And house prices would have to fall by 56 per cent to put the average mortgage borrower in to negative equity. The findings cast doubt on whether the political and economic damage done by falling prices is as serious as had been feared.

The number of unsold homes on the market has risen to more than one million, a 15 per cent increase on the same period last year. The figure, calculated by Rightmove.co.uk covers nine out of ten of all homes on the market and shows that not only are there more homes on the market, they are taking on average two weeks longer to sell.

Nearly one in ten British households will be millionaires within a decade, despite the global economic slowdown and falling property prices. Analysis by the Economist Intelligence Unit and Barclays Wealth shows that the number of households worth £1 million or more will increase from 1.5 million to more than 2.4 million, with those worth £5 million set to more than double by 2017. However Britain is forecast to slip behind China in the global wealth index, but remain the fourth wealthiest nation after the US and Japan.

The Bank of England is expected to admit this week that it is set to breach its inflation target in the coming months and warns that Britain is destined for two years of soaring costs and weak growth. Mervyn King is expected to unveil a consumer price index forecast of more than 3 per cent in the coming months, and will cut its economic growth forecast for this year and next. The warning comes as house prices decrease and repossessions rise, and the bank is expected to cut borrowing costs at least once, perhaps twice, in the coming months.

And finally, the inaugural World Architecture Festival award, backed by 26 architectural magazines from five continents, has been announced. Any new, converted or restored building in one of 16 categories such as places of worship, theme parks, public toilets or prisons, could win the title of best new building in the world. The festival takes place in Barcelona in late October.