The dismal figure is well below the 230,000 starts needed to meet demand and half the peak in the year to March 2006.
Property experts have warned the owner occupier model for delivering housing is failing. They are now calling for a Government rethink to generate a big push to build privately rented homes paid for by pension funds.
Private starts were down 8% compared with the previous year while housing association starts slumped 23% compared with a year before.
The latest returns for the final quarter of the year indicate a small improvement in supply.
But with seasonally adjusted figures up just 1% in the last three months of 2012 against the previous quarter they still fall woefully short of the scale of recovery needed from such historically low levels of house building.
Total completions are running at 115,620 in the 12 months to December 2012, 1 per cent higher than the previous year.
The current level of completions is 35 per cent below the peak level of 2007.
The geographic spread of increases and decreases is very mixed.
Some of the greatest increases in starts levels were in districts in London, Cambridge, Hull, areas of Warwickshire and Devon, districts across the Peak District, Gloucestershire and Worcestershire.
Areas with some of the largest falls in rates of house building starts include Lincolnshire, Bedfordshire, Suffolk, Essex, Hertfordshire and Kent.
Simon Rubinsohn, RICS Chief Economist, said: “These figures demonstrate the scale of the problem facing the country in delivering sufficient homes to accommodate a rising population.
“Notwithstanding this, RICS expect the volume of activity to increase over the coming quarters helped by some of the measures introduced by government.
“Even allowing for this, starts are only likely to reach 115,000 this year which is way short of need. This imbalance between demand and supply is likely to continue to underpin the relative resilience of both house prices and rents.”
Ian Fletcher, director of policy at the British Property Federation, said: “Against the backdrop of these figures we need to seriously think about how we’re going to build the homes this country needs to meet growing demand.
“As things stand the owner occupied model just isn’t delivering the required numbers, and we need to focus on a range of options.
“To improve overall housing supply it needs to be affordable, does not require access to mortgage finance and not put undue strain on tight public finances. An institutional-funded professional rented sector, building to let, ticks all these boxes.”
