Birmingham is on the cusp of a housing dilemma, experts at property firm Knight Frank warned yesterday.

The consultancy says there is a growing and increasingly urgent need for more family capacity homes to become available in Birmingham city centre and its suburbs to supply the current and anticipated demand.

Although a nationwide problem – the Birmingham situation is more desperate. Household growth in Birmingham is forecast to be larger than in most UK cities, rising by 90,000 over the next 20 years to nearly 500,000, yet according to Knight Frank's research, just 5.6 per cent of new homes under construction in the city centre will be suitable for the family market. Alarmingly, this figure rises to just 9.7 per cent in the city fringes, the area most likely to supply this demand.

David Fenton, head of residential developments for Knight Frank’s Central Region, said: "The shortage of family homes in central Birmingham is no secret.

"Yet the fact that there is growing demand for family capacity homes within the city borders may come as a surprise to many. In Birmingham and indeed nationwide, high land values and PPG3 Government planning policy has encouraged the higher density units which are typically found in apartment schemes, yet these are of an inadequate capacity for families. Birmingham has witnessed unstoppable regeneration over recent years, and as this process continues outwards, other house types need to be considered to ensure they attract middle income families.

"Currently Birmingham’s stock of new family homes is predominantly in Edgbaston, Hall Green and Sutton Coldfield with limited new family homes being constructed in Moseley, Harborne, Bearwood and within the Birmingham- Sandwell region.

"More need to be provided in these city fringes. Our evidence shows that Birmingham not only has the sites for city family homes, but also has the potential to set a UK benchmark solution."

In addition to the effects of the restrictive PPG3 density guidelines, Knight Frank attributes the lack of family capacity homes in inner urban areas to a number of reasons.

Firstly and arguably most importantly, developers are still waiting to be convinced of the market demand for homes in inner city locations.

Indeed, there has been a marked shift in build patterns with detached homes accounting for 32 per cent of new build homes in 2002 compared to 17 per cent in 2006.

Developers are comfortable with the product they provide and the overall city environment has in effect been shaped to suit young people rather than meet the requirements of families.

In addition, developers are now operating in a period of high build costs and inflation and as such, are focused on the price per square foot they can achieve.

Affordability pressures on city dwellers mean that purchasers have to weigh price closely against accommodation size.

Knight Frank says that a traditional 650sq ft one-bedroom apartment has become too expensive for many buyers, so developers have essentially shrunk the average size to fit the buyer’s wallet – the result being that developers are

concentrating on smaller rather than larger units – unsuitable for a family buyer.

The final reason is that families generally choose homes located within the catchment area of respected schools, and the quality and accessibility of good schools has a major impact on urban policy.

Inner city schools have suffered from a severe lack of investment, yet Birmingham City Council has recently committed #55.8 million to upgrading 12 primary schools across the city.

Furthermore, all 76 secondary schools will be either redeveloped or rebuilt as part of a #1 billion finance package from the Department of Education Services and seven ‘Birmingham Academies’ are also planned. These schools and academies will be spread across the whole city but the greatest improvement is anticipated for inner city areas, encouraging more families to live there.

Liam Bailey, head of residential research at Knight Frank, said: "In addition to improved schools, we believe further demand will stem from a growing number of commuters wishing to reduce their daily travelling times, which for up to 9,000 city workers is well over an hour. If developers can succeed in reversing the economic factors and provide vibrant communities to revive inner city areas, there is likely to be a pool of workers willing to snap them up.

"Ultimately though, the greatest impact will be from a change in Whitehall policy. Although the brownfield and high density development pattern is working well, to increase the number of new build homes, a greater mix of units should be encouraged.

"The emphasis needs to switch from building homes to building communities, but this needs to be profitable too."