Despite evidence suggesting property prices are now falling, they will have to drop a long way before many people can afford their own home in Oxford.

Data from the Nationwide building society showed a 13 per cent hike in values in the city last year, the third highest figure in the country, which, of course, puts more pressure on the need for social housing.

Six years ago, Oxford City Council decided to tackle the problem by insisting every new development contained 50 per cent social housing.

Recently it updated the rule to insist that they also contained a mix of properties - so instead of the social housing element being made up of apartments and small homes, they must now also include larger family accommodation of four bedrooms or more.

This is now causing a major problem for builders, because they claim that buying the land - and then building on it - is costing more than the cash they recoup from the sale of the properties.

As a result, building firm W.E. Black is mothballing plans to put up 85 new homes in Railway Lane, Littlemore, and others could follow suit, exacerbating the need for homes, pushing up prices and adding to the council's waiting list.

Managing director Eric Gadsden says the scheme, which has been in the planning pipeline for five years, has cost him £5m.

When he first drew up his plans, Mr Gadsden said he was happy to comply with the council's policy that all new developments of more than nine properties should contain 50 per cent social housing.

But Mr Gadsden added the recent change of policy means he would make a loss on the site as the value of the social housing is now more than half the private housing element.

He said: "Before, the value of the social housing was about 38 per cent of the site value. Now it is 55 per cent.

"Social housing has zero value to us as land owners when it is rented and the build costs are more than a housing association will pay. It is more profitable for us to mothball the whole site.

"In two years' time there will not be any low-cost homes built in the city, because the council will have forced every builder out. It is almost as if it doesn't want to see homes built."

Another building firm, MD Construction, based near Farmoor, supports Mr Gadsden's view.

Its managing director, Oliver McGovern, said: "The problem with social housing is that it will be built at between 45 and 55 per cent of market value, which is effectively the build cost.

"If I were building a ten-home scheme, I would then have to recoup the land value and the cost of building the development from the sale of the remaining properties, which does not make sense financially, and I lose money.

"The council could ask me to build a 15-home development, and I would do it if only five of the properties were affordable homes instead of eight, but there is no negotiation."

Mr McGovern claims that some sites are now deliberately being "underdeveloped" to keep them under the council's nine-home limit before the need for social housing kicks in.

He said smaller-scale developments could only take place viably if the council owned the land in the first place, removing some of the cost to the builder.

Meanwhile, the council's housing waiting list is 5,000, which it estimates will take five years to clear. This is set to grow if the builders continue to pull out or keep developments below the threshold.

The Oxford Citizens Housing Association, the main social housing provider in the city, acknowledges there is a major problem on the horizon unless the impasse between the developers and the council is resolved.

Charles Shaw, head of development at OCHA, said: "The 50 per cent social housing requirement puts huge pressure on developers.

"The way to break the deadlock is for developers to prove to the council the lack of economic viability of any scheme they are bringing forward, which is not helped by uncertainty in the property market and other economic circumstances.

"But if the supply of homes is restricted, then prices will rise, which means more people will require social housing."

And Mr Shaw also agreed that if a scheme does go ahead, the developer is likely to charge a premium for the properties available for private sale in order to make the development viable.

But John Goddard, leader of the city council and policy holder in charge of planning, said the social housing policy had been changed to meet the needs of families.

He added: "What we don't need are developments which are made up almost entirely of two-bedroomed flats.

"We do need a proper balance with larger flats and houses, as in recent years it has been getting out of kilter. The proportions changed in the last few months after a substantial consultation and the only objections came from builders.

"Maybe the smaller builders should combine or become more efficient."

And Michael Crofton Briggs, head of planning at the city council, added: "If developers or builders are concerned about how this will affect their sites then we would always encourage them to talk to the planning department to see how we can work together with them."

But if Mr Gadsden is to be believed, the time for talking has stopped and actions speak louder than words.