The average house price in England will rise by 25% over the next five years to reach £274,700, despite fears of a housing market crash - according to a new report published by the National Housing Federation (NHF).

The document - researched by independent economists Oxford Economics - forecasts that house prices will fall in 2009, start to recover in 2010, and then rapidly increase from 2011.

The report, entitled Home Truths 2008, states that while demand is growing, supply of new housing is falling, with only 75% of the new homes required being built each year.


In addition, the document reveals that the least affordable place in 2007 was London, where a typical home was 14.2 times local salaries, compared to a national average of 11.2.

The NHF, which represents England's housing associations, says its report shows that despite some calls to the contrary it is critical that the Government continues to invest in new social housing - as one in every thirteen households is now registered as being in need of an affordable home.

NHF Chief Executive David Orr said: "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.

"People are living longer, they're delaying getting married and they're more likely to get divorced - meaning we now have more households than ever.

"One in thirteen households is registered as being in housing need, with four million people now living in cramped or difficult conditions."

(CD/JM)