According to the National Housing Federation (NHF), UK residential house prices will increase 40% over the next five years due to a shortage of properties.

It said the average value of a home will rise to £302,400 by 2012, and prices in London will jump 48% to £478,300.

Prime Minister Gordon Brown has promised to build more homes to make property more affordable for Britons after prices tripled in the past decade.

David Orr, chief executive of the National Housing Federation, said: “Continuing house-price rises and the resulting housing crisis are set to stay with us for a long time. Home owners may see this as good news, but it carries a sting in the tail. More and more people are going to find themselves priced out.”

The average price of a home is currently 11 times the average workers’ annual earnings. In London, where the average house value is 13 times earnings, prices will continue to be driven higher by wealthy foreign investors and financial-services workers, the report said.