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House prices to rise 14 percent by 2015

House prices across the UK will rise on average 14 percent – an all-time high – by 2015, according to a new report by the Centre of Economics and Business Research.

The report predicts that the average British home will be worth more than £200,000 by 2015, which is up from the current price of £176,000.

The CEBR put down the expected rise to the lack of houses compared to demand. Shehan Mohamed, economist for the CEBR, said: 'We forecast an average of 110,000 new homes to be built every year over the medium term.

'This is significantly lower than the 225,000 homes that need to be created every year to keep pace with current housing needs, population growth and the trend towards reduced household sizes.'

However, while the news of house price rises makes uncomfortable reading for first-time buyers, the 14 percent rise is less than the current year on year rate of inflation, which rose to 4.4 percent this week.

Douglas McWilliams, CEBR chief executive, said that it was not going to be a return to the boom years of the nineties. 'We do not expect a house price boom, but the housing shortage is likely to push prices gently upwards,' he said.

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