Housing developers should be allowed to offer residents £10,000 cash incentives to win support for new construction projects, a think-tank report suggested yesterday.

The Policy Exchange said that decisions on new housing should be made by a ballot of affected residents instead of local authorities.

Their report says that, given that a hectare of land rises in value from £20,000 to £1.8 million when it moves from agricultural to residential use, such incentives could be "very substantial."

Implementing the proposals would have a huge impact on the Westcountry housing market, where thousands of people are waiting for permanent homes.

The think-tank say radical changes are needed to contain a "housing crisis." Its report, entitled Making Housing Affordable, suggests the government should aim that by 2030 all working households should be able to afford a decent home.

The average price of the cheapest 25 per cent of homes is 12 times the income of a household on the minimum wage.

Policy Exchange argues that the only way to achieve this is to embark on a massive home-building programme.

In Cornwall alone there were approximately 12,000 people waiting for homes in Autumn of last year.

In Devon's South Hams – where 10 per cent of properties are second homes – 1,300 families are on the waiting list, according to figures released by their district council.

At present, local authorities decide if proposals get planning permission, but Policy Exchange says this should be changed so that local people vote on proposed developments and reap the rewards of allowing more homes.

"If a village decided to increase in its size from 2,000 to 3,000 households, incorporating a large and high-quality development, this would easily permit a £10,000 payment to every existing household in the village," says the report.

Alex Morton, a former civil servant and author of the report, said that he did not see this as a "bribe or incentive."

He said: "The money could just as well be used to build a park."

But Westcountry property experts yesterday voiced concerns over the proposals.

Mike Saltern, Executive Portfolio Holder for Housing at South Hams District Council, said he had "reservations" surrounding the report.

"The current planning regulations allow for benefits to the community as a whole – such as contributions to open spaces and education – whereas this would only mean individual payments," he said.

"We do need to overcome nimbyism, but that could be achieved without this kind of huge scheme."

Richard Copus, Devon spokesman for the National Association of Estate Agents, said: "It sounds morally obnoxious – but it might work.

"We somehow have to get out of the negative mindset of not wanting any more houses. Giving people thousands of pounds might achieve this – but it is total bribery."

Mr Copus added that developments which include a mixture of speculative and affordable housing should be encouraged as a means of improving the current situation.