Plans to build 600 homes on the former Goodyear tyre site in Wolveryhampton have been put on ice because of the crisis in the construction industry, it was confirmed today.

Regeneration specialist St Modwen, which is reclaiming 85 acres of the massive plot in a £150 million scheme, said that although it was still doing reclamation work, there was no prospect of work starting on the housing part of the development. Chief executive of the West Midlands-based company, Bill Oliver, said: “We have little in the way of options.

“The sad fact of life is that there is no demand for houses at the moment, so there is no demand for land.

“There is going to be some construction, hopefully with work starting on the retail element of the scheme. It is really a case of putting the cart before the horse, but at least it means we can open up access to the site itself.”

The plans for Goodyear include residential, a parade of shops including a supermarket, a new school to replace Oxley Primary and a 16-acre public park for sports facilities. Aldi is set to create a 17,000 sq ft store, which developers hope will be a catalyst for more retailers to move in.

There was better news on St Modwen’s £1 billion development of the former Longbridge car plant in Birmingham, which has been boosted by Bournville College’s decision to relocate onto the massive site.

St Modwen revealed today that its trading profit for the year ending November 30 last year was down to £8.2 million compared with £50.9 million in 2007.

Mr Oliver said: “It is a very difficult world at the moment and we are no different from the majority of property companies. But we have made a trading profit and are still doing business.

“Sadly the values of the property we own have fallen dramatically, and ours has dropped by around £130 million.”

The group also revealed that slump had led to a number of employees being made redundant last October, 30 on the property side and another 16 from a leisure operation in Trentham, Staffordshire.