House prices to rise by 15% in five years

House prices will increase by 15% over the next five years due to a shortage of available properties, according to economists.

The price of the average three-bedroom home will rise by more than £25,000 from £176,184 to £202,068 by 2016, the Daily Mail reports.

Despite the economic downturn, a persistent shortage of housing will trigger an upswing in house prices.

House prices will rise gradually, by 1.6% next year, before reaching an annual increase of 4.3% in 2016, according to the Centre For Economic And Business Research (CEBR).

However, if house prices did rise 15% over the next five years it would only mean property values rose at an average of 2.8% annually - a far slower rate than the 1980s to 2000s period.

If inflation remained stuck at its current high level, 5% on the Consumer Prices Index, house prices would fall in real terms.