Recommendations to help reduce house price volatility include:
* An increase in the supply of housing;
* Supply is central to managing house price volatility. The scale of the increase required, however, means that this alone will not reduce volatility in the market;
* The reform of both Stamp Duty and Council Tax;
* These existing taxation tools could help to reduce house price volatility in the shorter term. Both Stamp Duty and Council Tax should be linked to the real value of a property and regularly updated;
* Stamp Duty: the current ‘slab’ structure of stamp duty should be replaced with a ‘slice’ structure whereby only the value that exceeds the threshold is taxed or taxed at a higher rate (similar to income tax). Thresholds should be uprated regularly in line with consumer price inflation;
* Council Tax: in the short-term, the number of bands should be extended. In the medium term, there should be a move towards a system based on a fixed percentage of a property’s value. In the long-term a national property tax could be created with safeguards for low-income households;
* A better safety net for homeowners based on shared responsibility between lenders, borrowers and Government.
Julia Unwin, Chief Executive of the JRF, said: "Since the 1970s, there have been four boom and bust cycles in the housing market. This persistent instability distorts housing choices, inhibits house-building, and drives arrears and possession rates, putting people at great risk, and creates wealth inequality between the generations.
"We have set out to provide a series of policy options that together would help provide long-term stability in the market. I urge policy-makers to look at these and act now, because the seeds of the next housing boom have already been sown."
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