George Osborne
George Osborne will make local councils pre-approve planning for housing on brownfield sites.Reuters

Local councils will be made to pre-approve planning for housing on brownfield sites, before any developers have even made proposals, in a bid to tackle the country's deepening crisis in the supply of homes.

The move was unveiled by Chancellor George Osborne in his annual Mansion House speech to the City of London.

He said he expects 90% of the brownfield sites suitable for housing to be developed by 2020, providing 200,000 new homes, under these so-called "local development orders".

Councils will get financial support from the Treasury's £5m pot to support the first 100 developments.

"Now I suspect there will be people who object to new building, even on the brownfields of our cities," Osborne said.

"But let me be clear. I will not stand by and allow this generation, many of whom have been fortunate enough to own their own home, to say to the next generation: we're pulling up the property ladder behind us.

"So we will build the houses Britain needs so that more families can have the economic security that comes with home ownership."

House building is accelerating in the UK. But only around half of the homes needed to meet demand are being built.

Government estimates put the total number of new homes needed annually until 2030 at 290,500.

Demand for housing is on the rise. In the short term this is being driven by cheap mortgages, thanks to the Bank of England's record-low 0.5% base rate and a recovering domestic economy.

In the longer-term, a steadily increasing population will also put more pressure on the country's inadequate housing supply.

As a result of the worsening imbalance between supply and demand, house prices are soaring.

Office for National Statistics (ONS) figures show the average price of a UK home hitting £252,000 in March 2014 after rising 8% over the year.