The credit crunch is set to force house prices through the roof as new builds come to a stand-still, according to a new economic report.

In its consumer and housing prospects report the Centre for Economic and Business Research (CEBR) said property prices could rise by as much as 30 per cent between 2010 and 2012.

CEBR predicts a drop in house prices over the next two years, but then expects a sharp recovery.

It said that the number of house completions will fall by 20 per cent this year forcing demand to outstrip supply.

CEBR economist Richard Snook said: "With the fundamentals of the housing market still relatively tight, the credit crunch might already have sown the seeds of the next house price boom."

In July last year Gordon Brown pledged to build three million new homes by 2020 to ease the pressure on the housing market and make homes more affordable.

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