WHILE the North has thriving housing markets, there are still too many deeply unpopular areas, says a new report.

Market failures, however, are said to offer unprecedented opportunities to create sustainable communities fit for the twenty-first century, says a 93-page document entitled Moving Forward: The Northern Way.

Now Yorkshire Forward, the Government's regional development agency, has been asking the region's decision makers to look at key findings and the next steps for the Northern Way project.

Deputy Prime Minister John Prescott has already highlighted the potential for faster economic growth to bridge a £29m output gap between the North and rest of the UK.

On the housing front, the Northern Way Steering Group says today's pattern of cities, towns and villages in the North largely follows decisions made over the past century by house builders, developers and municipal authorities. Demand had come from those working locally and commuters.

But the report says that, over the past 50 years, employment patterns had changed dramatically with the decline of traditional industries.

"All evidence suggests most households aspire to live in higher quality homes, in safe, tolerant neighbourhoods served by good schools and leisure facilities. Most want to own their home," says the housing report.

"In popular communities - and in some others - we see rapidly rising house prices and severe shortages of affordable housing," it adds.

Among a range of principles put forward are:

* Setting affordable housing targets for each market and how they will be achieved - including rural markets.

* Targets for the reduction of commuting by car, showing how housing and land allocations will contribute.

* Building priority to brownfield sites well served by established public transport routes

* Other brownfield and greenfield sites a lower priority

* Offer a wide range of homes for rent and sale well served by public transport.

* Targets for major improvement in energy efficient homes.

* Ensure efficient operation of housing markets - taking account of changing employment patterns and current oversupply/under-supply in differing locations.

* Replacing housing at a faster rate

Meanwhile, three distinct types of affordable housing have been defined.

They include provision in areas of severe shortages; in low demand areas for residents affected by redevelopment, plus housing for the most vulnerable and excluded groups.

"Current planning and housing policies do not reflect this distinction and are not leading to sufficient increases in the supply of affordable housing," says the report.