Low-income families could be locked out of the market, the NHF said Homeowners who bought at the peak of the market peak may face four more years of negative equity, a housing group has said.
The National Housing Federation (NHF) said the average buyer paid £216,800 for a home in 2007.
They may now have to wait until 2014 before prices recover enough to make their homes worth more than they paid.
The organisation, which campaigns for affordable housing, also said prices are still too high for many buyers.
“Proposed caps on housing benefit payments could also put nearly a million people on low incomes at risk of losing their home.”
David Orr National Housing Federation chief executive
According to the NHF, house prices will dip again next year by 3%, before steadily climbing thereafter.
They expect prices to rise some 22% by 2014, bringing the average price of a house to £226,900.
According to NHF chief executive David Orr, prices will “inevitably increase in the long term because of the huge under-supply of housing”.
But even at current depressed prices, he cautioned that houses remain unaffordable for most low-to-middle income families, thanks in part to tighter mortgage lending standards.
“There’s a very real risk that an entire generation will be locked out of the housing market for the foreseeable future,” he said.
He criticised government decisions to scrap regional house-building targets and withdraw funding for affordable housing.
“Proposed caps on housing benefit payments could also put nearly a million people on low incomes at risk of losing their home,” he added.
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