MercoPress. South Atlantic News Agency

UK: House prices 'to soar by 40% and will reach £300,000'

The cost of an average home in England is set to soar by 40% during the coming five years, to break through the £300,000 barrier by 2012, a report has warned.

The National Housing Federation (NHF) said the price of the average property in the UK would increase to £302,400 by 2012, while a home in London would cost nearly £500,000. The group warned that the price of the average home in England was now £206,594, nearly 11 times average earnings, with prices pushed up as supply continued to drop even further behind demand. But despite the fact that owning a home is increasingly being pushed out of reach of first-time buyers, the NHF said a house price crash was unlikely to happen. It added that house prices had risen by 156% since Labour came to power in 1997, but during the same period average incomes had gone up by just 35%. Research carried out for the group by Oxford Economics found that by 2012 the average cost of a home in London will have soared from its current level of £318,864 to £478,300. In the South East, the average property will cost £392,900, while in the East they will have reached £340,200. Even traditionally-cheaper regions such as the North West and Yorkshire and Humberside will have average house prices of more than £200,000, while homes will cost just below this level in the North East at an average of £187,200. It said that in Kensington & Chelsea and South Buckinghamshire, house prices were already more than 20 times local average incomes, and there are now only seven areas across England where the cheapest homes cost less than four times average local earnings. Unsurprisingly, it found that social housing waiting lists grew by 57% during the past five years to 1.6 million households, the equivalent of around four million people. The group said its study reinforced the need for the Government to act on its recent pledge to build an additional three million homes by 2020.