Britain's economic stability could be badly affected by rising house prices which are predicted to treble by 2020 according to a new report.

A study by the Centre for Economic and Business Research published on Monday calculated the price of an average home will leap from £101,000 today to £300,000 by 2020. It also warned prices in the capital will go from £183,000 now to almost £600,000.

The news will bring cheer to homeowners fearful that the current price boom cannot continue but it will heighten the fears of first-time buyers who are increasingly being priced out of the market.

A shortage of properties will continue driving the price rises but the CEBR report also pointed to continuing stock market volatility and a low interest rate environment which will lead to more people investing in property.

UK regions that are not part of the boom will continue to lose out, with houses costing least in the North East of England which will see an average rise of 3.7 per cent a year to £123,651.

The findings were backed by the Joseph Rowntree Foundation, which in its own recent report warned that unless the government finds ways to build more homes, the UK will be short of a million new dwellings by 2022.

The foundation warned the implications are that decades of price hikes will hit both the economy and public services.

Lord Best of the foundation said: "In our view, housing shortages are set to become one of the most significant social issues of the next 20 years. Unless we act now, shortages will lead to overcrowding and homelessness. But they will also have knock-on effects for the whole of society, driving up house prices in areas of high demand, inhibiting economic growth and making it harder for good quality public services to be delivered."

The view that prices are unlikely to fall was backed by the Royal Institute of Certified Surveyors but with a note of caution.

"What is being predicted is perfectly possible - prices have risen by 70 per cent in the last 10 years. This is based on two assumptions though; that the rate of inflation and economy stay the same for the next 20 years," said a spokesman. "The central problem remains there is going to be a real shortage of housing.

"The housing stock in this country is old - a lot of the turn of the century properties are now reaching the end of their useful life. There is also a shortage of trained people in the construction industry because of the numbers of people set to retire over the next 10 years. These factors are also likely to add to the problem."