8th May 2015
A house price boom is expected in the capital as estate agents and investors breathe a sigh of relief that a mansion tax is not on the horizon.
Following a Conservative victory in the polls, estate agent Savills is predicting a 19.3% growth in house prices over the next five years.
However, prime real estate in the capital is expected to surge ahead thanks to a combination of more buoyant markets and the end of a threat of a mansion tax on property over £2 million.
London estate agent Douglas & Gordon believes there is a 10-year residential investor window open until Labour swing back to the centre.
However, in the next 12 months, Mead expects residential property worth £2 million or more to rally by up to 20% following a year of subdued markets and ‘we think that capital values in the prime London residential markets could double’.
‘Crucially we think that there is likely to be a 10-year cross-party consensus that seeks to encourage wealth creation, foreign inward investment, tight public spending and lower taxes,’ said Mead.
‘This will keep monetary policy loose and be a big green light for overseas investors to choose the UK in general, and UK real estate assets in particular, and to be able to do so with a 10-year horizon. London is likely to be the main beneficiary of these inward investment flows.’
He added that although the mansion tax threat has been lifted it is possible ‘that some sort of commission is set up to look into residential taxation, from which we think higher council tax bands would emerge’.
Charlie Ellingworth of Property Vision said the election result was ‘unambiguously positive’ for the housing market.
‘The spectre of a mansion tax has haunted the market for the first half of this year and now that threat has gone turnover will certainly pick up. One has to hope that will not cause further crazy upward spirals in prices,’ he said.
‘If the Conservatives have any sense they will spike the Labour guns for the future by reforming the council tax bands. It is also to be hoped that they will somehow manage to kick the insane Right to Buy election pledge into the long grass where it deserves to stay.’
It is not just good news for those who own expensive properties, chief executive of eMoov.co.uk, Russell Quirk, said those who wish to own their homes will still be able to benefit from the Help to Buy ISA and lower stamp duty rates.
All homeowners are expected to benefit from a Conservative government.
‘[Our] research has found that under their tenure, a Conservative government is twice as successful in seeing an increase in house prices, certainly a plus where homeowners are concerned,’ said Quirk.