House price growth forecasts for 2015 continue to rocket due to a dearth of new properties coming on the market, excluding the young from getting on the ladder while preventing older home owners from moving, according to the Centre for Economics and Business Research (Cebr).
Cebr upgraded annual growth forecasts to 5.6% this month, up from 4.7% in June. Meanwhile, the average price of a UK property stands at a record high of £263,000 this year, and prices are expected to rise a further 3.5% in 2016 and 4.2% in 2017.
The housing research group highlighted a number of drivers stifling supply of properties. For instance, home owners want to sell at the top of the market and do not currently anticipate a downturn in prices. Another factor is a drastic rise in older households who are retired and not likely to sell up. There are also low levels of housebuilding, and the cost of getting on the property ladder, especially in London
Cebr said a low level of housebuilding is only one of the causes behind the problem, addressing this exclusively – as the new Housing and Planning Bill largely does – will not go far enough in controlling rising home prices.
Regarding the UK's ageing population, incentives such as a reduction in stamp duty could encourage "rightsizing", and persuade pensioners to put larger properties on the market.
Cebr added that historically one of the most common reasons for switching homes was to move up the property ladder, from a small flat to a family-friendly house. But the price difference between a terraced house and a purpose-built flat has skyrocketed in some regions, most notably London. In 2000, this price difference stood at £46,000, but has nearly quadrupled to £176,000 in 2014.
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".
Commenting on the results, John Healey MP, Labour's Shadow Cabinet Minister for Housing and Planning, said: "Young people and families on ordinary incomes are facing a cost-of-housing crisis which has got worse under the Conservatives. Private rents have soared and the number of home-owners has fallen by over 200,000 since 2010, to the lowest rate in a generation.
"It is hard to imagine a worse time for this Government to embark on a fire sale of affordable homes with no plan or prospect of proper replacement.
"Aspiring home-owners and renters have been failed by the Tories over the last five years and this Housing Bill is another huge let-down. This is the latest expert body to say Government plans simply won't do enough to reverse their failure on housing costs."