Negative equity could last five more years
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The Federation’s latest forecast, produced by Oxford Economics, predicts that house prices will fall by 12.2% this year and another 4.6% in 2010.
Prices are then set to rise by 1.1% in 2011, 7.5% in 2012. 8.4% in 2012 and 6.8% in 2014.
The average house price will have reached £227,800 in five years’ time, according to the forecasts.
The research predicts that the average price for a home in London bought in 2008 for £331,500 will drop to £268,600 in 2010, before rising to £354,900 by 2014.
The average East Midlands home will be worth less in 2014 at £165,300 compared to the £172,500 it was worth in 2007.
The forecasts are at odds with Nationwide's house price index for July which predicted a "reasonable chance" of a rise in house prices by the end of the year.
The NHF’s research also says that only 60% of new homes needed are being built each year.
As a result five million people could be on housing waiting lists by 2010, the NHF says.
David Orr, chief executive of the NHF, says: “Our research shows that while house prices are falling in the short term, they will inevitably increase in the long term because of a fundamental under-supply of housing.
“Even though house prices are falling, and are set to remain sluggish in some areas for the foreseeable future, affordability is not improving for many low-to-middle income households.
“For millions of people who want a home, getting a mortgage can be like winning the lottery.
“First-time buyers and those wanting to buy shared ownership properties remain victims of a deep freeze in mortgage lending.
“Until lending is freed up, young and lower income households without access to large deposits will be locked out of the market.”
