House prices are set to rise by 25% over the next five years, reports the National Housing Federation.
The NHF Home Truths report says the average house price in England will reach £274,700 in five years time, despite fears of a housing market crash.
The document – researched by Oxford Economics – forecasts that house prices will fall in 2009, start to recover in 2010, and then rapidly increase from 2011. It says house prices will rise by 5.2% in 2011, 9.2% in 2012 and 9.3% in 2013 – with the typical price at the end of the period being well above the average in 2007 of £222,600. The report also states that while demand is growing, supply of new housing is falling, with only 75% of the new homes required being built each year.
David Orr, chief executive of the NHF, says: “Our report shows that despite concerns about the current housing market downturn, house prices will increase substantially over the mid to long term.
“Demand for housing is going up, while the supply of new homes is going down. This means that as soon as the economic outlook improves house prices will resume their previous upward trajectory.”