By Jonathan Davies

More than half of under 40s in the UK will be renting privately by 2025 as they become priced out of mortgages, according to accountants PwC.

According to the PwC's forecast, the average house price will rise 5% over the next five years to £360,000. And industry figures suggest that first-time buyers will need a deposit of around 18%, equating to nearly £65,000.

"Driven by a decade of soaring house prices before the financial crisis and lower loan-to-value ratios post-crisis, the deposits needed by first time buyers have risen significantly. As a result, a generation of private renters have emerged and this will increasingly be the norm for the 20 to 39 age group," said Richard Snook, senior economist at PwC.

"There is also a rising dichotomy in the market between those - mostly older - households who own outright and those - mostly younger - households who still have a mortgage or rent to pay."

PwC said the number of homes owned outright, largely due to completed mortgages, will rise from 8.4 million to 10.6 million by 2025, accounting for 35% of the total.

Between 2005 and 2025, PwC said the proportion of residents who own their home will fall from 70% to 60%.