The Government's much-trumpeted housebuilding targets are under threat after a shock fall in the number of homes built last year.

During the final quarter of 2007 construction work started on about 40,735 new homes in England, an 11 per cent decrease from the 45,563 started in the same period in 2006, according to the Department for Communities and Local Government.

The 12-month rolling rate of new-home starts totalled 166,820 at the end of December, a decline of 6 per cent from the rate at the end of 2006. The official target is to build 240,000 homes a year by 2016.

One of Gordon Brown's first pledges when he took over as Prime Minister last summer was to build three million homes in England by 2020. Experts believe that target has become unattainable and predict that the dramatic slowdown in starts over the past quarter will continue this year. It follows a sharp fall in demand since the autumn because of falling house prices and a squeeze in mortgage lending.

David Stubbs, senior economist at the Royal Institution of Chartered Surveyors, said: “We certainly think both housing starts and completions will come under pressure. Completions are bound to fall as housing starts have now been falling for the past two years. In the last three out of four quarters we completed more houses than were started - that is simply unsustainable.”

Housebuilders Barratt Developments, TaylorWimpey and Persimmon have all indicated over the past few weeks that they were reducing work on new developments.

In 2007, 174,900 houses were completed, the highest in 18 years. However, househunters may not have enjoyed an increase in choice of new homes as that figure included a sharp rise in the proportion of social housing compared with those made for private sale.

Housebuilding last peaked in 1968, when 352,000 homes were built, of which 203,000 were for private sale and the rest social housing.

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