The average price of a UK house is set to hit £321,600 by 2020, a jump of almost £60,000, new research suggests.
According to the Centre for Economics and Business Research, house prices will continue to grow and building more property won’t be enough.
The forecaster said annual house price growth had been revised from 4.7% in June to 5.6% this month and that the average price of a UK property will reach a record high of £263,000 this year.
It predicts prices are set to rise by a further 3.5% in 2016 and 4.2% in 2017.
Cebr said one of the key reasons behind the upward revision was due to the lack of properties on the market “drying up” the supply.
It said that one of the main drivers behind this was the dramatic rise in homeownership amongst retired people who are less likely to move home. Cebr suggested that one solution to this problem is to encourage pensioners to put larger properties on the market though the removal or reduction of stamp duty.
It also believes that price differences rocketing between different types of house in some regions is preventing people moving up the property ladder.
For example, in 2000 the price difference between a terraced house and a purpose-built flat in London was £46,000, which 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.”
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