People who bought homes at the height of the property boom in 2007 may remain in negative equity for four more years until their houses are again worth as much as they paid for them, according to a study.

The Home Truths 2010 report from the National Housing Federation says people who bought at the height of the boom paid on average £216,800 but their homes will be worth less then they paid until 2014, when the average value will jump to £226,900.

The study predicts a 22% rise in house prices in the five-years to 2014, sparked by an undersupply of new housing.

In 2009/10, the NHF study says, a mere 87,360 new homes were started in England, producing only enough homes for a third of the new households forming each year.

The federation fears an "entire generation" of people will be locked out of the housing market as a result of high house prices.

A shortage of social housing will leave people who cannot afford to buy a property with "little realistic chance" of obtaining a social home, the study predicts.

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."