LONDON (ShareCast) - There was some cheer for long suffering homeowners today as experts predicted house prices will jump by 25% over the next five years.

In a report for the National Housing Federation (NHF), bright sparks at Oxford Economics think prices will soon recover from a 4.4% drop this year and 2.1% in 2009.

Strong demand for homes will lead to an increase of 1.3% in 2010, with further rises in the next three years of 5.2%, 9.2% and 9.3%, taking the price surge to 25%.

“As soon as the economic outlook improves, house prices will resume their previous upward trajectory," said NHF chief executive David Orr.

He also called on the government to keep investing in social housing and provide support for mortgage rescue schemes to help avoid a sharp increase in the number of repossessions.

"People are living longer, they're delaying getting married and they're more likely to get divorced - meaning that we now have more households than ever," said Orr.

Less than 168,000 new homes were completed last year and just 120,000 are expected to go up this year.

Earlier today, housing data analyst Hometrack revealed that property prices kept falling in July, down 1.2% from June and 4.4% lower than this time last year.

The average price of a property in England and Wales is now £168,500 following the biggest annual slide since the survey began seven years ago. These are prices not seen since October 2006.

“With no immediate end in sight to the current uncertainty, activity levels are likely to remain suppressed with prices remaining under pressure into the autumn," said Hometrack’s director of research, Richard Donnell.

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