Homes 'to cost £300,000 by 2020'

Look but don't touch... house price inflation could get even worse

The average price of a home in the UK could hit £300,000 by 2020, a new study suggests.

If the figures prove true, the rise could destroy any chance of ensuring affordable housing for those on low pay without major policy changes.

This will make the step onto the property ladder even more difficult and... lead to an increase in the average age of the first time buyer

CEBR

Research done by the Centre for Economics and Business Research says that the UK's population is likely to grow faster than previously expected.

The snail's pace of reform in the planning laws means that there is no way housebuilding can possibly keep up with demand, according to the CEBR's Housing Futures 2012 study.

The result: house prices growing, on average, by 6.24% a year between 2002 and 2020, meaning the price of the typical home will rise from £101,164 to £300,643.

Eastern boom

According to the research, the south east of England will continue to be the dearest part of the country, with the average house costing £595,164 in 2020 compared with £183,262 now.

But the east of England will see the most explosive rise, from £109,166 now to £368,058 in 2020.

In contrast, prices in the north east will stagnate, the report says, rising to £123,651 from £64,436.

"Good news for those already on the property ladder, as they will see their house prices increase in value," say the survey's authors, Douglas McWilliams and Helena Carless.

"But for those with low incomes and those who have not yet purchased their first home, this will make the step onto the property ladder even more difficult and will undoubtedly lead to an increase in the average age of the first time buyer."