Average house will top £650,000

LONDON house prices are set to surge to an average of more than £650,000 in the next 20 years, a new report claims today.

The predicted rise means that getting on the property ladder will become an even more daunting task, with typical homes costing around 10 times average London-earnings by 2024.

The average house price is currently around £230,000 - or seven times earnings. This figure has doubled in the past six years.

First-time buyers are already struggling to raise the finance for their initial purchase, with very few properties available below £200,000.

The report, from a respected economic think-tank, suggests that the £1m house - once regarded as an impossible dream for the vast majority of people - will become the benchmark for a standard family home in much of London.

The Centre for Economics and Business Research says that London's once booming property market will take off again around 2010 after a prolonged slowdown, regaining its position at the head of Britain's property 'hot spot' league table.

The growth will be driven by the capital's booming population and economy. House price inflation in London will average around 5% - slower than in the late Nineties but still well ahead of inflation.

For the UK as a whole the rate will be around 4.5%, the Housing Futures 2024 report claims.

Co-author Doug McWilliams said the inexorable increase would force more young people to flat-share in ever larger households. 'I think we will see flat sharing coming back in a big way,' he said.

There has been a 20% increase in the number of people living six or more to a house in recent years, he added.

In the more immediate future, the London property market will pass a major milestone as early as next year, when the average house price rises above £250,000. This will dramatically increase the cost of moving for thousands of people, as it marks the threshold of 3% stamp duty.

According to the report, moving house will cost almost £15,000 - including all taxes and fees.

The report says a national house price collapse is unlikely unless the market continues to boom at its current rate. 'We think a soft landing is more likely than not,' it concludes.