RETIRED homeowners are sitting on a multi-billion property windfall which is causing gridlock in the Scottish housing system and preventing thousands of younger buyers moving up the ladder.

New research has found that property wealth in the hands of the over-65s ‘baby boomers’ has risen to £41.2 billion, and grew by a record £842 million in the past year.

However, while soaring housing values are good news for those who have paid off their mortgages, the ever-increasing cost of getting on the property ladder and a lack of housing stock for people wanting to downsize is causing the market to stagnate.

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Now experts have warned that action is desperately needed to free up housing and help pensioners move out of large family homes, to accommodation more suitable for the older generation.

Otherwise, experts warn, a generation of younger buyers will never be able to buy a family home similar in size to their parents’ property.

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Financial specialists Key Retirement say that housing wealth in the hands of the UK’s over-65s has grown by 42 per cent since 2010, the equivalent of £321 billion or £68,500 on average for every home owning pensioner.

With more than 282,000 homes in Scotland owned by people aged 65 or over, this is slowing down the number of transactions at the top end of the market as supply dwindles.

Herald View: Do not punish the old. Help the young find a decent home

Last year in Scotland, it grew by £3,000 on average, with pensioners seeing their net worth grow month on month by £250.

Dean Mirfin, chief product officer at Key Retirement, said: “The long-term strength of the UK housing market is delivering for retired homeowners who have made around £7,900 in the past year.

“Total property wealth of more than £1 trillion means pensioners who have paid off mortgages can rely on using their homes to generate tax-free returns no matter what happens in the short and medium term.”

But with little financial incentive to downsize, older people are looking for homes which will suit their care needs. However, these are in short supply.

Savills Planner Ruth Highgate, who is based in Glasgow, said: “Many older Scots are stuck in a housing trap. The housing market does not fully meet the demands from older people to downsize into suitable retirement accommodation.

“There are a number of challenges facing the Scottish retirement living sector, including relatively high land prices in Scotland compared to other parts of the UK and an inconsistent approach to planning across Scottish local authorities.”

“However, with a growing older population who have a pressing housing need and equity to invest, not only is there a commercial opportunity, but a corporate responsibility for the planning and development sector to address this important market in Scotland.”

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In a further blow to potential home movers, average house prices ended last year £12,000 higher on average than they had been 12 months earlier, according to official figures.

Annual house price growth in December stood at 7.7per cent in Scotland which is the highest in the UK and compares to 5 per cent in England, 5.4per cent in Wales and 4.3per ceny in Northern Ireland.

Separate figures also show that renters are losing out compared to those who own property.

According to the latest Social Tenants in Scotland report, Scottish tenants spend almost a quarter of their income on housing costs.

This compares to just 9 per cent for owners with a mortgage and 3 per cent for those who own their home outright.

Herald View: Do not punish the old. Help the young find a decent home

The report found just under a third (32 per cent) of social rented households in Scotland spent more than 30 per cent of their net income on housing costs over the same period, lower than the equivalent figures of 50 per cent in England and 46 per cent in Wales.

The average weekly rent for social housing in Scotland was £74.44 in 2016/17, up 2.1 per cent on the previous year.

Graeme Brown, Director of Shelter Scotland, said: “These statistics once again show Scotland’s broken housing system where young people struggle to get a home.

“At the heart of the problem is demand for homes outstripping supply.  To tackle the problem, we need a huge injection of new properties of all tenures - but especially homes for social rent – to reduce inflationary pressures and make a fairer housing system for all.”