Encourage pensioners to ‘rightsize’ says economic think tank
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Pensioners should be incentivised to move home to slow house price growth according to a leading economic forecaster.
The Centre for Economics and Business Research (Cebr) said the UK’s ageing population is contributing to out of control property price increases as it revised up its house price growth forecast from 4.7 per cent in June to 5.6 per cent this month.
It said that a lack of supply and a stagnant property market is behind this upward revision, with retired individuals less likely to move home causing the price of a family home compared to a first-time flat to soar.
The research found that the price difference between a purpose-built apartment and a terraced home in London increased fourfold between 2000 and 2014.
At the turn of the millennium a family would need to find an additional £46,000 to switch from a flat to a family-friendly house. In 2014 this figure had increased to £176,000.
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Current government housing policies are focussed on encouraging house building but the Cebr said that this was only one of the causes behind soaring house prices and other housing market features should also be addressed.
Pensioners should be encouraged to ‘rightsize’ with incentives such as stamp duty exemption or reduction suggested to increase supply of larger properties to the market.
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This would make moving up the property ladder – historically one of the key reasons to sell a home – more affordable, freeing up smaller first-time buyer properties.
Nina Skero, Cebr Economist and main author of the report, said, “a reduction in the number of properties being put on the market has placed further upward pressure on house prices in some parts of the UK. This is a result of low levels of housebuilding, but also other factors such as an ageing population and the rising cost of moving up the property ladder.
“The price gap between a first-time home and a larger family home has skyrocketed in some regions, such as London, curbing activity in the housing market. For many, the rungs of the property ladder are moving further apart, making it impossible to upsize”.
Last week, a survey from housing charity Shelter among 3,800 tenants found that nearly half of private renters in England who want to buy a home are unable to save any money towards a deposit, while a quarter are only able to save £100 or less a month.
Shelter has warned that further house price rises will “push the goal posts even further away for those hoping to become home owners”.
Meanwhile, a survey released last week by property website Zoopla among nearly 5,000 home owners found that 92 per cent are confident that property values where they live will increase over the coming six months.
Households’ expectations that house prices are set to continue rising is another of the key reasons behind the supply shortage of properties on the market, according to Cebr, with home owners sitting it out in order to sell at the top of the market.