Young Britons are being forced to ditch the aspiration of home ownership that has reigned in the UK for several decades, as new government measures will fail to give many the chance of buying their first home in 2012 and beyond.

Britain is unlikely to shake off its housing hangover anytime soon, with prices and transactions on ice, as the country mourns its housing boom which inflated economic growth, prompting the government to vow to get Britain building again.

New government proposals, which include a mortgage indemnity scheme to support 100,000 new home loans, are tinkering around the edges and failing to address some of the complex issues the country is facing in terms of housing.

It's very hard to see that the kinds of measures proposed to date through the housing strategy (will) reboot the market, said Peter Williams, chairman of housing consultancy Academetrics.

The government policy review is obviously earnest and worthwhile but it is striking that one has a strategy without any clear aims and objectives or plan; it's a series of measures, he said.

Activity in the housing market is stagnant as economic uncertainty, the threat of a renewed recession and rising unemployment are cutting deep in terms of confidence, tipping consumer morale to its lowest level in almost three years.

Moreover a decimated mortgage market in the wake of the financial crisis has left first-time buyers hamstrung by lofty deposit requirements, and pressured banks show few signs of easing lending criteria as they repair their balance sheets and work to meet new regulations.

The number of first-time buyers in Britain fell 7 percent last year from 2010 according to mortgage lender Halifax, representing the lowest annual total since its records began in 1974.

Without the motor of those taking their first step on the housing ladder, transactions have fallen to record lows and fewer homes are now being built in the UK than at any time since the 1920s, leaving the country struggling to meet the needs of a growing population.

Prices in some areas such as the South East have fared better than many feared, propped up by low interest rates. A modest overall fall is expected this year but that could prove optimistic should the euro zone sovereign debt crisis worsen significantly, a Reuters poll of analysts found.

However, homeowners have still seen a fifth sliced off the value of their property since the height of the boom four years ago, compared with a third in the United States.

Some economists and politicians are not opposed to a slowly deflating market, after average house prices tripled during a property boom in the 10 years to 2007 and a property bubble that many denied even existed.

The Bank of England's David Miles said recently that the UK housing market may never look the same again, transformed by the collapse of the mortgage market which experts say has set it apart from previous downturns. This is pushing the UK toward a lower rate of owner-occupation and bigger rental sector.

In the longer run this is not likely to be a source of major net losses. To the extent that it offsets tax distortions and creates a more stable housing market, it will create some gains, Miles said in a speech at the end of November.

In other parts of Europe where renting a home is seen as normal even by many on higher incomes, this may seem unproblematic, but the kick-back from a nation used to home ownership may pose risks to the UK government in the long term.

SETTLE DOWN

Housing is a bedrock of consumer wealth in Britain and some construction industry executives argue that a seismic shift in the UK housing market is unlikely, due to the nation's history of home ownership, and a probable return to life of the mortgage sector via new entrants and increased competition.

However, a chief executive of a builder and developer in the London area said cuts to the government's affordable homes budget as part of its austerity drive and constrained first-time buyers are creating unease.

If I was responsible for the whole of the UK market, I would be nervous now about what we're going to do about first-time buyers, said the CEO.

In the North-East of England, opposite the council buildings in central Hartlepool, situated in a bleak 1960s concrete shopping centre, a 30-year old youth worker describes the frustrations of buying a first home with her partner.

Not only are we going to be debt to the bank, we're also in debt to our parents... we're probably never going to afford to get married, and god forbid we ever decide to have a child, said Jade Heppenstall.

With both sets of parents lending money to enable the couple to meet the high-deposit requirements, Heppenstall is one of the lucky few. Nonetheless, she is part of a growing generation that is questioning how a university education and nearly a decade of work can lead to so little.

I've worked my arse off, (so) how the hell has this happened? she said.

HOLY GRAIL

The government has proposed to reform planning laws to help unblock the flow of new homes being built, but has met fierce resistance from some core supporters who are reluctant to see new homes in the leafy areas in which many of them live.

It also prevented sales drying up altogether for homebuilders in the first-time buyer market with its equity loan scheme, First Buy.

But the lack of a government roadmap and support for the growth of the private rented sector - which is being used to meet housing demand - is sustaining the nation's obsession with home ownership.

The government has pledged to reinvigorate Margaret Thatcher's right to buy scheme of the 1980s which sold off many state-owned rental properties, and the lack of rights renters enjoy remains, especially compared to those in continental Europe.

Much more is required to overcome the under-development of professionally managed, custom-built rented housing, said Jennet Siebrits, head of residential research at CBRE.

Bringing in new money from institutional investors has long been mooted in the house building industry as a solution to the housing crisis, with pension funds in particular attracted to the steady rental yields, particularly from social housing.

The cash-strapped government confirmed plans at the end of last year to tap British pension funds to provide the bulk of up to 30 billion pounds of investment in 500 new infrastructure projects including housing.

It's a holy grail but no-one has yet worked out how you achieve it. These funds have a long list of worries, one is just the hassle of managing housing, said Tony Dolphin, Senior Economist at the Institute of Public Policy Research.

The pressure on government from a dissatisfied youth and the social issues related to an undersupply of homes, particularly in the affordable home arena, will only grow.

Rental yields have soared 10 percent in the past two-three years, and local councils are facing mounting pressures to come up with social housing solutions.

Tragically, housing is at the core of virtually every major issue we're facing in the town, said Jonathan Brash, a local councillor for the Labour Party in Hartlepool, famous for its shipbuilding and steel-making industries which declined after the Second World War.

If you decide to squeeze the amount of money in young people's pockets, at the same time as not really investing in any new build, and making it impossible for councils to bring empty properties back into use, the only direction is disaster for young people, he said.

Whether the government listens to any of that, I don't know. There is no evidence so far, he added.

(Reporting by Lorraine Turner; Editing by Toby Chopra)