HOUSING supply in Scotland is not keeping up with demand, with watchdogs warning it could be 20 years before enough new homes are built to meet projected population rises.

A new report, described as a warning to ministers by leading industry figures, has found councils and registered social landlords (RSLs) have built 14,000 fewer homes since 2005 than the Scottish Government said were needed.

Audit Scotland claims funding for housing fell by around one-quarter between 2008/09 and 2011/12 with further reductions to come, while the number of new private homes built has more than halved since 2007/08 when the economic crisis took hold.

It blames the recession, along with constraints on lending, competing and increasing demands on capital resources, and reduced government subsidies. Changes to the benefit system, an ageing population and the rising number of single person households are creating further pressures.

It warns: "Our analysis suggests it could be more than 20 years before there are enough new homes to meet the projected increase in households in any one year."

The report comes a week after the Scottish Government scrapped the right-to-buy of social housing to make homes available to the more than 400,000 people on waiting lists and days after ministers announced an extra £44m for social landlords to build properties.

Despite these moves, industry sources said the Audit Scotland report was a warning housing budgets needed to be increased.

One source said the overall annual grant would need to be doubled to meet demand.

The source said: "Even with the recent announcements things will continue to fall massively short of targets and need. This report is for consideration in the context of the autumn spending review. It's blunt and tells the Government what needs to be done – increase the budget. Double it even."

The Government has set out its vision to provide an affordable home for all by 2020. In 2011, it set a target of 6000 new affordable homes a year, 4000 of which were to be social homes.

But Audit Scotland said the housing supply was not keeping up with levels of need, and the Government had to clarify how it will work with councils and those in the housing sector to meet targets.

The report has also recommended that the Government improves the detail and reliability of national information on housing, including an assessment of the needs of current and future populations.

Caroline Gardner, Auditor General for Scotland, said: "The sector is under increasing pressure. Budgets are tightening, while demand is increasing and fewer houses are being built."

Labour's James Kelly called it a "damning indictment" of Nicola Sturgeon's time in charge of housing.

A Scottish Government spokesman said it had taken decisive action to improve housing, including investing nearly £900m over three years into building 30,000 affordable homes.

He added: "As this report recognises, we are having to deal with Westminster's cuts to our capital budgets, a difficult lending environment, and the UK Government's welfare reform agenda.

"We announced councils and housing associations can receive an extra £16,000 from the Scottish Government for every new home they provide – an additional £44m – to stimulate the supply of affordable and good quality homes. We are helping people onto the property ladder and supporting house building in the private sector too."