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New home starts fell by over a quarter in 2008-09 and completions were down by 18 per cent despite more construction by local authorities and housing associations. 

Homes for Scotland, which represents companies building 95 per cent of new homes built for sale across the country, estimates that the number of  private new homes started by developers fell by 31 per cent in the 12 months to April this year when you strip out construction by public bodies.

Jonathan Fair, Chief Executive of Homes for Scotland warned that the low level of new build starts could re-ignite house price inflation as demand once again exceeded supply.  He called on the Scottish Government to introduce a version of ‘Homebuy Direct', a scheme already operating in England which offers an equity loan for part of the purchase price on affordable low cost homes for sale.

In contrast, the Scottish Government focused on the increase in public sector construction.  The latest figures show that nearly 5,000 new affordable homes were completed last year, more new public sector homes built than in any year since 1995/96. 

Even so, building by developers dwarfs public sector construction.  Almost 22,000 homes were built in the last year (including public sector homes) and even in the height of a recession, building by developers outnumbered public sector construction three to one. 

Before the recession, the Scottish Government calculated that the country needs 35,000 new homes a year to meet demand and prevent runaway house price inflation.  Achieving that target is going to be possible with higher levels of building for private sale, even if public sector construction continues to grow.