The average house price is expected to climb from £167,000 to £178,000, an increase of 6.5 per cent, predicts the Centre for Economics and Business Research.
This increase is far larger than the think tank predicted just four months ago, when it thought house prices would nudge up by 2.6 per cent.
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The CEBR is not the only organisation being forced to alter its outlook, after the property market wrong footed nearly every expert last year – defying the recession to recover strongly.
Last week the Nationwide building society predicted house prices could soon climb 10 per cent on an annual basis because of the lack of supply, with many home owners nervous about putting up their house for sale.
The CEBR said it expected banks and building societies to approve more mortgages, making it easier for buyers to access the money needed to purchase a house, in turn helping to push up prices.
The think thank predicts around 72,000 mortgages a month will be approved by the end of the year, up from about 60,000 now, and a low of just 33,000 or so during the worst of the slump.
It said while this level of approvals was still well below pre-credit crunch levels, it was likely to lead to a "sustainable growth path" for house prices over the medium term.
Benjamin Williamson, one of the report's authors, said: "The fact that house prices have already risen by almost 10 per cent since the bottom of the cycle has surprised most commentators.
"However, with the rate of mortgage lending more than doubling over this period of time, a shortage of new properties on the market, low interest rates and unemployment not rising nearly as fast as expected, it is easy to see how prices have moved so quickly.
"This combination of factors will continue to push prices up during 2010, albeit at a more modest rate than we have seen over the last six months."