Economists predict that the cost of the average home will gradually rise 16 per cent to take prices above 2007's high as the market returns to growth from next year.
Leading experts forecast that house prices are set to rise by £30,000 and that mortgage lending will double as Britain's economy picks up over the next four years.
The respected Centre for Economics and Business Research (CEBR) think-tank believes there will be a return to a sustainable housing market as the high street banks provide more funds to help people buy property.
The CEBR calculates the average cost of a property today is £175,000. By 2015 that will be £205,643. The 4 per cent year-on-year surge is predicted to start at the end of 2011 and carry on until 2015. It would see the average UK house price rise to above the 2007 high of £191,340.
CEBR chief executive Douglas McWilliams told the Daily Express: "The main factor driving house prices up is the shortage of available housing which has already pushed up rents. But the factors that will ultimately drive house prices up again are the loose monetary policy that will accompany the Government's deficit reduction and the ability of banks to lend again on consumer-friendly terms as their own underlying financial position improves.
"This should not be confused with boom and bust. We are forecasting a gradual four-year recovery at an annual rate of about 4 per cent."
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