Struggling first-time buyers have been thrown a lifeline after Liverpool City Council approved a planning application to build affordable homes on the site of Sir Paul McCartney’s birthplace.

The development of 195 homes, which was granted planning permission this morning, will include 64 houses and apartments for affordable rent and 37 houses for shared ownership by housing association Riverside. They are to be built on the site of the former Walton Hospital, where the Beatles star was born in 1942.

Riverside’s Project Manager Conor McGuigan said: “We are committed to building stable homes for those at the sharp end of the housing crisis so are delighted to announce that we will start work on site in November.

“This development is possible thanks to the Homes and Communities Agency, which is providing funding through its Affordable Homes Programme.

“We share the government’s ambition that anyone who works hard and wants to get on the property ladder should have the opportunity to do so. As such, we are delighted to be able to offer shared ownership for aspirational first-time buyers, alongside affordable rent for the most needy.

“We consulted with neighbouring residents prior to submitting the application for the development, which has been designed to be in keeping with the surrounding site and will respect the setting and views of the listed clock tower building.”

The development will include eight two-bedroom and 29 three-bedroom houses for sale through Riverside Home Ownership plus 27 two-bedroom and 10 three-bedroom houses and 15 one-bedroom and 12 two-bedroom apartments for social rent.

The site forms part of the former Aintree University Hospitals Walton Day Care and Outpatient Centre – known locally as Walton Hospital. The hospital closed its doors in December 2010 and was demolished in 2011. The development will be next to the new Clock View hospital, which opened earlier this year off Rice Lane.

According to the National Housing Federation’s Broken Market, Broken Dreams report, people are expected to pay more than six times the average income to own a home in Merseyside

The average salary for people in Merseyside of £23,525 doesn’t come close to the £32,615 required for an average mortgage in the county, pricing thousands of workers out of owning a home.

But because Riverside is a not-for-profit organisation and their payment options are subsidised, buyers will pay less each month with shared ownership than with an outright mortgage.