The National Housing Federation has issued a report today which predicts house prices will rise by 25% over the next five years to reach £274,700. The research, carried out by Oxford Economics, estimates that prices will fall in 2009, start to recover in 2010 and rapidly increase from 2011 rising over 9% in 2012 and 2013.

These rises are to be caused by a lack of housing supply, as demand for social housing grows and more households are formed each year. The National Housing Federation says this research proves that it’s critical the Government continues to invest in new social housing, as one in every 13 households is now registered as being in need of an affordable home.

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.’

Mr Orr is therefore calling on the Government to work with housing associations ‘in a flexible and innovative way in order to ensure current housing targets are met.’