UK
01/05/2014 07:05 BST | Updated 01/05/2014 07:59 BST

'Broken' UK House Prices Could Hit Average Of £900,000 By 2034, Warns Shelter

Bloomberg via Getty Images
'Sold' signs sits on photographs of a residential properties in an estate agent's window display in London, U.K., on Monday, Dec. 30, 2013. U.K. house prices rose in December and will extend gains in 2014, led by London and southeast England, Hometrack Ltd. said. Photographer: Simon Dawson/Bloomberg via Getty Images

Average property prices in England risk quadrupling to more than £900,000 in 20 years due to the "broken" housing market and the lack of house-building, the charity Shelter has warned.

The homelessness charity's stark warning comes as research by Nationwide found that property prices across the UK leapt by 10.9% year-on-year in April, marking the first time in four years that the annual growth in values has hit double figures. Property prices rose by 1.2% on the previous month to hit £183,577 on average.

Robert Gardner, Nationwide's chief economist, said housing market demand from potential buyers is "likely to remain robust" amid growing consumer confidence.

In its latest report, Shelter found that property prices could quadruple by 2034 from its current average of around £250,000 if more is not done to tackle the shortage of new houses, which is seeing 100,000 fewer homes being built than are needed each year.

Shelter's report, titled Building The Homes We Need, calls on the government to raise house-building levels to 250,000 a year by 2021 in order to match the growth in demand.

Shelter reached its shocking forecast, assuming current trends continue, based on modelling using the Nationwide Building Society's house price index.

Among the suggestions to fix what Shelter describes as a "broken" market, the charity proposed the creation of a new "national housing investment bank", which would provide low cost, long term loans for housing providers, as part of a programme of new ways to finance affordable house building. It said the bank could also offer special savings accounts, such as "housing Isas" to raise finance from retail deposits.

Campbell Robb, Shelter's chief executive, said: "Our chronic shortage of affordable homes means that a generation face a future of living in their childhood bedrooms into their thirties. But this report proves that the next government can turn the tide on the housing shortage within a single parliament.

"The thousands of young people and families forced to watch their dream of stable home slip further out of reach are already paying the price for successive governments' failure to build the homes we need. With housing now a top issue for voters, politicians of all parties are rightly beginning to feel the need to act."

In response, housing Minister Kris Hopkins said: "This report is alarmist and takes no account of the work already well under way to get Britain building and deliver the affordable homes that families need. Since 2010 we have built 170,000 affordable homes and are set to deliver 335,000 by 2018.

"Improving the housing market is a vital part of our long-term economic plan. That's why we've cut the deficit we inherited to keep interest rates at a record low and prioritised limited financial resources for investment in housing. We are also helping hard-working people onto the property ladder with over 27,000 people helped through the Help to Buy schemes."

This comes as Labour leader Ed Miliband said that his party would tackle the housing crisis with a rent cap and to abolish letting fees.