The Town and Country Planning Association said today that an increasing need for new homes and developers inability to meet demand, combined with the credit crisis was massively extending the shortfall of housing.

In its Tomorrow Series paper ‘new and higher projections of the future population in England: a first look at their implications for households and housing' published today and launched at the Labour Party Conference it said its research showed a 'continued escalation in newly forming households'.

The report said increasing longevity, shrinking household sizes as more people chose to live alone, rising divorce rates and to a lesser extent migration have all been identified as drivers of household demand in this paper.

Escalation in the number of new households

Chief executive Gideon Amos said: 'This first independent assessment of the latest household projections shows continued escalation in newly forming households at a time when the house building industry is unable to match demand due to the credit crunch. The worrying implication of this report and its picture of a burgeoning older population - 3.7m of the population increase are aged 65 and over - is the spectre of rising overcrowding, homelessness and social exclusion.

'The gap between the homes we need and the houses available is forecast to become increasingly stark with overcrowding the only option for many who are unable to obtain mortgages. Even when credit conditions improve and mortgages again become available the current undersupply of additional homes, will quickly risk a return to house prices spiralling beyond peoples reach.'

Housing target 'short of requirements'

Dr Alan Holmans, senior research fellow at the Cambridge Centre for Housing and Planning Research at Cambridge University and co-author of the report, said: 'The figures presented in this paper suggest that Government targets to increase the annual rate of additions to the housing stock to 240,000 a year by 2016 and to add 3 million additional units by 2020 fall significantly short of requirements.'