Housing group gives four-year negative equity warning
Homeowners who bought at the peak of the market face four more years of negative equity, a housing group said.
The National Housing Federation (NHF) said the average buyer in England 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 their loan.
Meanwhile, figures from the Bank of England show that the number of mortgages approved for UK home buyers was barely changed in July at 48,722.
The figures reinforce data from lenders and surveys which suggest that prices have reached a plateau after the revival that started in the spring of 2009.
The Bank's figures show that in July, the number of mortgage approvals was just 160 higher than in June and only slightly higher than the average recorded in the previous six months.
With lenders continuing to ration severely their loans to house buyers, net mortgage lending rose by only £86m in July, one of the lowest monthly increases on record.
"The Bank's July mortgage figures offer further evidence of a stabilisation in the level of home loans," said Brian Murphy of mortgage brokers the Mortgage Advice Bureau.
"The October Spending Review — D-Day for consumer confidence — is approaching fast and many prospective borrowers are understandably being cautious."
According to the NHF, house prices in England will dip again next year by 3%, before steadily climbing thereafter.
The federation expects prices to be 22% higher by 2015 than they were in 2009, bringing the average price of a house to £226,900.
The NHF, which represents housing associations in England, said in its report that prices are still too high for many buyers.
Unless homeowners wish to sell their property, being in negative equity - when your home has become worth less than the mortgage secured against it - does not necessarily pose a problem.
But it is when people are looking to move that they can face a struggle, as lenders are entitled to insist that borrowers redeem their loans.
In theory, if the mortgage is worth more than the house and the borrowers cannot find the money elsewhere, they will be prevented from moving.
Other groups have issued similar forecasts.
The Royal Institution of Chartered Surveyors has said that house prices are starting to fall, while figures from the Land Registry suggest that prices are levelling off.
The accountancy firm PricewaterhouseCoopers expects prices to be flat for the second half of 2010, and warned that they might not reach the levels seen at the peak of the market for another decade.
"A combination of circumstances in the market have made it very, very difficult for house prices to recover," NHF chief executive David Orr told the BBC.
"But actually the big problem that we have is that we've created a kind of perfect storm where there is negative equity for some people and they're trapped and can't move, but prices haven't come down enough to make buying a home a realistic option for people in their 20s and 30s in ordinary jobs.
"We really are in danger of pricing people out of owner-occupation."
He also 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.