House prices won't return to 2007 levels until 2021 say PWC

House prices will not return to their pre-crash peak until 2021 after taking into account the effects of inflation, accountants PricewaterhouseCoopers has warned.

Although the firm expects prices to rise 3pc to 4pc annually over the next four years and to be back at their 2007 high in cash terms at the end of 2014, households will have to wait a further seven years to make up the ground lost after factoring in inflation.

Currently, house prices are 18pc below 2007 levels in real terms, PwC calculated, although they are down just 3pc in headline levels. The property market has been surging back to life in recent months, on the back of the state-subsidised Funding for Lending and Help to Buy schemes.

The report said: "We expect to see a gradual recovery in house prices over the next few years. In cash terms, average UK house prices might be back to their 2007 peak level by the end of 2014, although in real inflation-adjusted terms this might not happen until 2021."