he average British house price is to increase by 40 per cent over the next five years, according to a new set of figures.
In research carried out by the National Housing Federation (NHF), the typical home is set to cost 302,400 pounds by 2012. Meanwhile, property prices in London are reported to almost reach the half a million pound barrier (478,300 pounds) in the year the city hosts the Olympic Games, up from current prices of 318,864 pounds, which could well place further financial pressure on residents living in the capital. The study, entitled Home Truths, also revealed that a crash in the housing sector is "unlikely" to take place despite predictions that a rising number of prospective first-time buyers will be unable to purchase a home.
Commenting on the predictions, David Orr, chief executive for the NHF, said: "Homeowners may see this as good news, but it carries a sting in the tail. A growing number of parents will find themselves subsidising their sons' and daughters' mortgages. And, across the country, more and more people are going to find themselves priced out of the property market - and struggling to find a decent home".
Mr Orr claimed that although "continuing house price rises and the resulting housing crisis are set to stay with us for a long time", housing associations are "ready to play their part" in helping to provide the 70,000 new social homes which are needed each year. However, with more than 1.6 million households (or four million people) on waiting lists for a social home, the federation suggests that now is the time for the government "to turn its words into deeds" and help Britons purchase housing.
Findings from the housing organisation also indicated that the typical property is currently worth almost 11 times the annual salary of the average British worker. Meanwhile, supply is said to have fallen even further behind demand for homes. Over the last ten years, house prices are said to have increased by 156 per cent while wages increased by 35 per cent during the same period. Prices of homes in the east of England are forecasted to rise by more than half to 340,200 pounds by 2012, compared to the current average of 211,880 pounds, with the south-east set to witness an average price of 392,900 pounds.
Seven areas across England - Hartlepool, Burnley, Hull, Pendle, Stoke, Barrow and Wansbeck - were revealed to have the cheapest homes which cost less than four times average local earnings. In comparison, those from Kensington & Chelsea and South Buckinghamshire are likely to have to take out much larger secured loans as house prices in the regions currently stand at more than 20 times the typical salary for someone in the area. The study also showed that mortgage repossessions increased by 65 per cent over the course of last year, affecting some 17,000 homes.
However, at the end of July, Your Move claimed that house prices are likely to fall over the coming weeks as five interest rate rises by the Bank of England over the last 12 months affect consumers' ability to afford property and make secured loan repayments. Despite this, managing director David Newnes claimed that millions of homeowners will witness a rise in monthly mortgage costs as they come to the end of their fixed-rate deals.
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