Pensioners should get lower stamp duty to put larger homes on the market, CEBR says

The CEBR predicts prices will rise by a further 3.5 per cent in 2016 and 4.2 per cent in 2017

Alex Wild said the Government must not wait to make cuts to benefits such as the winter fuel allowance (Getty)

Pensioners should be encouraged to put their homes on the market with stamp duty exemptions to address the UK’s crippling housing shortage, a leading economic forecaster said today.

The Centre for Economics and Business Research’s call came as it predicted the average cost of a UK property will reach £263,000 in 2015, an all-time high and 5.6 per cent ahead of last year.

The CEBR, which raised its forecast for house price growth from 4.7 per cent in June, blamed a lack of new homes for sale and low levels of housebuilding. It predicts prices will rise by a further 3.5 per cent in 2016 and 4.2 per cent in 2017

The shortages mean it is much more difficult for a growing family to “upsize” from a flat to a house. In London, the price gap between a terraced house and a purpose-built flat in London has nearly quadrupled from £46,000 in 2000 to £176,000 last year.

It blames a lack of properties coming on to the market driven by demographics as home ownership rises dramatically among older households since the 1980s while younger households are frozen out. Retired individuals are less likely to move, curbing the number of individuals putting property up for sale.

CEBR suggests older sellers with larger homes looking to ‘rightsize’ should pay lower or even no stamp duty at all on their new homes, encouraging pensioners to put larger properties on the market.

Meanwhile official figures show just 125,110 homes new homes completed in the UK in the year to March 2015, 29 per cent below the 2007 peak and barely half the 240,000 required according to official estimates.

CEBR economist Nina Skero 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.”

The Royal Institution of Chartered Surveyors says the market is hampered with a shortage of properties for sale. The number of new instructions had fallen in 13 of the past 14 months, RICS said.

Prime Minister David Cameron said last week that his government would change planning rules to encourage developers to build more affordable housing for buyers.