Supermarkets are planning to make strong moves into the housing market as a response to increasing pressure from local councils for the inclusion of social housing as part of redevelopment schemes.

Asda and Sainsbury are both planning to build 1,600 homes over the next three years, according to newspaper reports. Tesco is also reported to be looking at building 1,000 homes in the next year.

The homes are to be mostly concentrated around London but other councils are also suggesting supermarkets build affordable housing in exchange for planning consent.

Asda has already invested £30m for a waterfront scheme in Poole in Dorset, which will include a 58,000 sq ft store and 64 social housing flats as well as 98 waterside apartments and a commercial leisure scheme.

Sainsbury and Tesco are involved in similar schemes, working with a mix of partners including housing associations and construction companies.

In some occasions the supermarkets have plans to build flats over store extensions in order to meet demands for larger stores.