‘Skyrocketing’ prices stopping families moving to bigger homes

THE average UK house price will leap by nearly £60,000 over the next five years, according to an economic forecaster, reaching more than £320,000 by 2020.

The rungs of the property ladder are also moving further apart, according to the Centre for Economics and Business Research (Cebr) – making it harder for people to trade up to a bigger home as the cost has “skyrocketed”.

The forecaster said that house prices this year are expected to be 5.6 per cent higher than the average prices across 2014 – and the average UK property value will stand at a record high of £263,000 this year.

Property prices are predicted to continue to inflate in the years ahead. Prices are expected to be 3.5 per cent higher in 2016 than they were this year, with further annual increases of around 4 per cent in the four years that follow.

These increases will take the average price of a UK property to £321,600 during 2020 – £58,600 more than the average house price this year, according to Cebr. Cebr had previously predicted that house prices would increase by 4.7 per cent this year, but it has revised its figure upwards to 5.6 per cent in light of a lack of properties coming on to the market, which is “drying up supply” and driving up prices.

It also says that the price gaps between different property types are widening. This is making it harder for people to climb up the property ladder. For example, in London, someone who wants to move from a flat to a terrace house that is more family-friendly would now need to find an additional £176,000. This cost has nearly quadrupled compared with 2000, when the price of trading up between these property types was £46,000, according to Cebr.

Nina Skero, an economist at Cebr and the 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.”

Housebuilding schemes are not enough to control rising house prices, Cebr said. It suggested that, with an ageing population and retired people less likely to move home, a stamp duty exemption could encourage pensioners to put their family-sized homes on the market.