THE lack of affordable housing in the West is becoming a major barrier for businesses trying to recruit new employees to the region.

While falling house prices have grabbed the headlines in recent months, many in the West can still not afford to buy their own home.

A new survey reveals how much the lack of homes is hurting companies as they try to attract staff.

More than half of South West employers say that the availability and affordability of housing is now a major issue for their business, and 44 per cent say it is damaging their competitive position.

Almost half say there is a shortage of homes, whether for rent or purchase, within easy commuting distance of their business.

Most back the idea of releasing redundant employment sites for housing.

These are the main findings of a survey of regional employers, commissioned by the South West Housing Initiative (SWHI).

Backed by the Home Builders Federation, the National Housing Federation, the Chartered Institute of Housing, the RICS (Royal Institution of Chartered Surveyors), the Royal Town Planning Institute, the CBI, EDF and Clarke Willmott lawyers, the SWHI commissioned Bristol-based MSS Research to conduct the survey.

House prices have fallen over the past year according to major lenders, but this has not led to greater availability of affordable housing.

In fact buying a house is now an even more distant prospect for many.

SWHI co-ordinator Martin Willey said: “While recent reductions in house prices may seem like good news for many thousands of would-be first-time buyers, the reality is that their prospects of getting a mortgage have moved further out of reach. Lenders have reacted to the credit crunch, and the wider economic scene, by reducing their lending, increasing their interest rates, and demanding a much bigger deposit.”

As a result, house-builders have seen a devastating drop in the number of homes they can sell, leading to daily headlines of housing developments being halted in their thousands.

That is reducing the availability of affordable homes in the South West to a trickle, Mr Willey says.

Faced with the UK's biggest housing crisis, the South West has the largest affordability gap between average house prices and average earnings, and a growing shortfall between demand and delivery of new homes.

Michael Clarke, chairman of the SWHI, former CBI chairman for the South West and a partner at law firm Clarke Willmott, said: “We already knew that the South West has the country's biggest housing crisis.

“The results of this research highlight how that problem is now threatening the region's economy.”