The National Housing Federation has sponsored research by Oxford Economic Forecasting (OEF) into house price inflation in England.

According to the figures published, average house prices could be as high as £290,000 by 2011. The current average price of £195,000 could increase dramatically because there is not enough new housing.

The National Housing Federation, believes that over the next 5 years those on middle incomes will find buying their own home even further beyond their means. Even those on higher incomes may struggle to get onto the housing ladder as house prices increase from eight times average salaries to 9.2 times in 2011.

Local communities are already suffering as people cannot afford to buy a house in the area where they were brought up. The OEF thinks this problem will only get worse. The Federation noted that, in order to avoid this huge increase in house prices, the supply of new houses needs to increase by 80,000 every year.

Other housing market predictions do not compleletly share the views held by the OEF. Capital Economics, a research group, said that prices were likely to fall by the end of 2006. This view has proved to be incorrect. House prices will show a modest increase in the medium term according to both the Halifax and Nationwide.

With some people taking out a personal loans in order to fund mortgage deposits or cover the cost of moving expenses, great care should be taken to ensure that people are not borrowing beyond their repayment capabilities.

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