FAILURE to build enough homes will put a colossal strain on the housing market - just when demand is rising, says a report.

The study, Housing Britain's Future, shows how a jump in births combined with a decade of insufficient house building will hit millions of youngsters.

Young people will struggle with rising housing prices and rents, or be forced to stay and live with parents, says the National Housing Federation document.

The report shows that births in England rose by 22% to 6.9m between 2001 and 2011, during which time over 1.6 million new homes were completed.

It suggests that first-time buyer house prices will increase by 42% by 2020, when rents will be 46% higher that they are today.

The study forecasts that a shortage of affordable housing means 3.7m young people will be living with parents by 2020.

National Housing Federation director Ruth Davison said: "We failed to fix the housing market for the Eighties baby-boomers because we simply didn't build enough homes.

"This means that, even with decent jobs, many are now struggling to raise a mortgage deposit or pay their rent.

"But rather than learn from past mistakes, the country is still not building enough homes to tackle the problem."

The situation will be even worse for so-called Millennium children, says the study.

Seven years from now the eldest will be young adults, looking for work, seeking independence and dreaming of living in their own homes, it says.

Youngsters must be provided wth the foundations for a bright, stable future if they are to drive the country forward in an competitive global economy.

"Our government must look far beyond future elections and deliver a long-term house building programme that will create jobs, pump money back into the economy and give hope to millions of young people."

The report was published in the same week that the government announced a £40.9m investment towards affordable housing in the North East, Yorkshire and The Humber.

The funding would provide 2,222 new affordable homes in the area for a combination of affordable rent and affordable home ownership, it said.

A significant number of the new homes would be completed by the end of March 2015, and all of them by 2017.

The funding is part of an expanded national £450m Affordable Homes Guarantees Programme, which will be supported by the £3.5billion Affordable Homes Government debt guarantee to deliver thousands of new homes.

David Curtis, of the government's Homes and Communities Agency said: "The confirmation of this funding is great news for local residents, as it will ensure that there is a choice of housing for people where they want to live in homes that they can afford, making a real difference to the local community."

Housing minister Mark Prisk said: "Today's funding allocations will enable organisations across the country to hit the ground running, and play their vital role in getting Britain building and delivering the homes and jobs this country needs."