Homeowners who bought at the height of the housing market face another four years of negative equity before they recover what they paid, according to a forecast published today.

People who bought a property in England at the peak of the market in 2007 will have to wait until 2014 before emerging from negative equity, according to a report by the National Housing Federation.

Independent forecasts in the study Home Truths 2010 have shown people who bought at the height of the boom paid on average £216,800 and this will have risen to £226,900 by 2014.

The report also predicted a 22% rise in house prices over a five-year period to 2014, fuelled by an under-supply of new housing.

In 2009/10, it said, just 87,360 new homes were started in England, producing only enough homes for a third of the new households forming each year.

The federation said it feared an "entire generation" of people would be locked out of the housing market as a result of high house prices.

It added that the shortage of social housing will leave those shut out of the home ownership market with "little realistic chance" of obtaining a social home.

More than 1.76 million households, or the equivalent of 4.5 million people, were on social housing waiting lists in 2009, a 23% increase in the last five years, according to its figures.

Federation chief executive David Orr said: "Even though price rises look sluggish for the next few years, affordability is not improving for many low-to-middle income households as banks continue to restrict their mortgage lending and house prices remain historically expensive in relation to salaries.

"There's a very real risk that an entire generation will be locked out of the housing market for the foreseeable future and people will increasingly look to buy or rent an affordable home instead.

"But the Government's decision to scrap regional house building targets, withdraw funding for new affordable housing schemes and to cut budgets means the future looks bleaker than ever for millions of people currently stuck on waiting lists.

"Proposed caps on housing benefit payments could also put nearly a million people on low incomes at risk of losing their home - and further deepen the nation's dire housing crisis."