NEIGHBOURHOODS across Merseyside, where the government has spent millions attempting to revive the housing market, may struggle to recover from the recession, the Audit Commission warned today.

Areas in Liverpool, Sefton and Wirral, where the housing market renewal initiative Newheartlands has been in operation since 2003, are particularly vulnerable, the organisation said.

The Audit Commission review into the progress of the scheme, and others across the country, said the recession could not have come at a worse time.

With only six years into what was envisaged to be a 10 to 15-year regeneration programme, it said there is still much to do and delays can be ill-afforded.

Last year, Newheartlands built 605 homes, refurbished 2,116, acquired 598 properties, and demolished 594, mostly beating its targets.

But the Audit Commission has warned that, with developers retreating from high-risk areas, projects will have to work harder to convince them to stay.

Last year, Newheartlands was awarded £152m for the next three years – the biggest allocation of any of the nine housing market renewal areas – to be spent on building 2,300 new homes, demolishing 2,100 and refurbishing 7,600.

Last night, Newheartlands managing director Pauline Davis said: “We have been looking at a range of innovative measures to positively manage the economic situation.

“Newheartlands has exceeded 2008-09 targets in areas of new-build, refurbishments and acquisitions, demonstrating the excellent work which is being undertaken with our partners to monitor and maintain the momentum of the programme. We welcome the annual review, which we contribute to through our regular meetings with the Audit Commission.