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House prices 'will rise 40 per cent'

06/08/2007

House prices in England will rise by 40 per cent over the next five years, new research has claimed.

Average house prices will break the £300,000 barrier by 2012, the National Housing Federation (NHF) warned today.

More people are likely to turn to housing associations to help them find an affordable home as a result, putting an "increasing strain" on the sector, the social housing pressure group said.

With levels of affordable housing predicted to continue outstripping demand, the organisation is pressing ministers to deliver on their promise to provide an additional 70,000 new social homes every year.

Last month's housing green paper reiterated the government's intention to provide three million more homes by 2020.

Unless action is taken to boost the supply of affordable housing the average price of a home in England will reach £302,400 by 2012, the NHF has warned.

In a new report published today the group claims that while there will be an initial slowdown in the housing market over the next two years as interest-rate rises start to bite, property prices will subsequently shoot up due to the continued shortage of affordable homes.

House-price inflation will rise to ten per cent a year by 2009 as a result, according to estimates provided for the NHF by Oxford Economics.

According to the research the average price of a house in England last year was already almost 11 times more than average earnings, with property inflation running at 7.5 per cent in 2006.

Since Labour came to power in 1997 house prices have risen by 135 per cent in contrast to a 35-per-cent rise in incomes, the NHF claims.

It says the number of people on social housing waiting lists has subsequently risen, with an estimated 1.6 million households now on such registers – a 57 per cent jump over the past five years.

Commenting on the latest house price projections, NHF chief executive David Orr warned that rising property prices were having a "disastrous impact" on the country.

"Unless we do something radical about housing supply we will see more overcrowding, more grown up sons and daughters unable to move out of the parental home, more households living in unfit homes – more housing misery and ruined aspirations," he explained.




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