BUILDING of new houses in Devon has plummeted by nearly a fifth since last year in a further sign of the ailing property market.

Latest figures show there were 1,718 new homes built in Devon in the first three-quarters of this year, compared to 2,114 in the same period in 2007 – a fall of 19 per cent.

In recent months, Bellway Homes South West has put on hold its plans to build 100 new homes at the former County Ground, St Thomas, Exeter, because of the economic downturn.

The planned new town of Cranbrook, near Exeter International Airport, has also stalled, with developers unable or reluctant to embark on big new schemes in the current economic climate.

The data from the National Housebuilding Council will again cast doubt on controversial Government housing expansion targets.

Under a planning blueprint, Exeter will see an extra 3,000 homes built on top of current expansion plans for the next two decades. The number of houses planned for the city will soar from 12,000 to 15,000.

Across the wider Exeter area, the number of new homes will rise from 46,900 to 56,400 between now and 2026.

The latest house-building figures come as the Government pledged an extra £100m to help first-time buyers get on the property ladder and bolster the house-building industry during the downturn.

But Tory opponents have called on Labour to axe stamp duty for first-time buyers on properties worth up to £250,000, and scrap "bureaucratic initiatives" such as Home Information Packs.

Housing Minister Margaret Beckett announced this week £400m would be made available through the Government's HomeBuy Direct scheme, up from £300m when the initiative was first announced in September.

The initiative enables households with incomes below £60,000 to buy a new property with an equity loan. It is hoped the scheme will help up to 18,000 first-time buyers.

Mrs Beckett said: "For many young families who aspire to own a home, the difficulties in the housing market have made the step on to the property ladder that bit harder. This deal will give them more support and put their dream of becoming home owners within reach.

"At the same time, this scheme will help developers to weather the tough times in the market, by protecting jobs and helping to keep business going."

More than 20 developers have agreed to offer the HomeBuy Direct scheme, under which first-time buyers will be able to acquire a new home from more than 50 sites in the South West with the help of an equity loan.

The loan, which will be funded in part by the Government and in part by the developer, will be free of charge for five years and can be used as a deposit. It can cover up to 30 per cent of the purchase price.

Eligible first-time buyers will be able to apply to take part in the scheme from early next year.

But Shadow Housing Minister Grant Shapps argued that the Government's "arbitrary targets" failed to provide the houses needed.

He said: "Labour's bureaucratic initiatives such as HIPs have created confusion and uncertainty and stifled the building of new homes further so that the economic downturn has ushered in a collapse in the number of homes being put up — even as demand remains high."