A FORMER hospital site could be used to build homes costing £60,000 for first-time buyers.

The Department of Health has considered selling the 200-acre Coldeast Hospital site, at Sarisbury Green Fareham.

But now Deputy Prime Minister John Prescott, pictured right, believes the site could be used to help get people on the property ladder.

Under the new initiative, unveiled by Mr Prescott yesterday, new homes would be built on spare public land to keep prices down.

Builders will be challenged to build homes as cheaply as possible to give people in the south-east a better chance of entering the property market.

The scheme will involve first-time buyers who cannot otherwise afford a mortgage.

They would pay for just building costs - without having to meet the value of the land, which will still be owned by local councils or the government. First-time buyers fell by 27 per cent in 2003 as people on low incomes are priced out of the housing market.

He said: "More and more young people want to own their own homes but just can't afford it - it's our job to help some of those first-time buyers who are unfairly priced out of the market. The new scheme will put surplus public land to better use to create new homes for first-time buyers.

"If we take land costs out of the equation, I believe it should be possible to build a high-quality home for around £60,000."

The scheme, piloted by English Partnerships in the South-East, depends on the construction industry being convinced to bring down the spiralling costs of building a home.

But Mr Prescott said: "Experience in other parts of Europe tells us that using modern construction techniques and materials, it is possible to produce high-quality, modern homes much more cheaply than is the case in the UK, and without sacrificing environmental standards."

Housing minister Keith Hill MP added that the finer details of the scheme would still need to be worked out.

He said: "These things will take time but we recognise this is an urgent need and it will be sooner rather than later.

"What happens when a first-time buyer sells up, these are the details we would like to work out more clearly."