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Action is needed to address a looming crisis in the housing sector, with property prices forecast to soar by a whopping 50 per cent and rental by 25 per cent by 2025.

This scenario is being forecast in a report by the Association of Residential Letting Agents (ARLA) and National Association of Estate Agents (NAEA) who worked with the independent Centre for Economics and Business Research (Cebr).

The report calls for action to be taken to overhaul the property market. If prices do soar as predicted, it is forecast that the number of people renting their homes will increase by 9 per cent while home ownership will fall by 7 per cent by 2025.

The housing report says the average price of a property could reach £419,000 by 2025 with London prices rocketing to £931,000. As it is highly unlikely that salaries will rise accordingly, the price of purchasing a home will be out of reach for many young workers.

But even renting property will eat up more of the average disposable income. Rents are predicted to rise by 27 per cent to an average of £171 a week with London tenants facing an even bleaker future and having to find an average weekly rent of £314.

It could lead to a vicious cycle with an increased demand for rental properties as fewer people can afford to get on the property ladder. This could also drive up the price of properties with an estimated 29 per cent of households living in rented accommodation by 2025.

Tough future for the property rental sector

Letting agents and property managers will face a difficult time if there is a shortage of decent properties to rent, particularly in areas of high demand such as major cities or university towns. It could also make it more difficult to recruit staff in certain areas, such as London and the South-East, if wages are not sufficient to cover the high rents.

ARLA managing director David Cox said that help was needed in the rental sector to lift the property market out of its current state.

NAEA managing director Mark Hayward added that the increase in rents will make it more difficult for tenants to even attempt to save up a deposit for a house.

Government needs to encourage large-scale investment

ARLA and NAEA have proposed various ways in which to tackle the housing crisis including Government debt guarantees. It is believed this is one way in which to encourage large-scale institutional investment in the sector which would mean there are more properties available to rent and this, in turn, could help to keep rents at sustainable levels.

The Government has pledged to build one million properties before 2020 but the sector needs more than words. ARLA and NAEA are also calling for the Government to offer incentives to the construction industry to take on more apprentices or trainees. They are also appealing for moves to add construction workers, such as bricklayers, to the shortage occupation list which makes it easier for firms to employ workers from outside the EU.

If action is not taken, it could force more tenants into sub-standard or unregulated housing as they cannot afford to pay the rents demanded for decent stock.