Following the somewhat surprise victory at the polls by David Cameron and the Conservative party last week it is likely that the continued Conservative presence will bring some stability to the residential property market, particularly at the higher value end, thanks to the cessation of the threat of ‘Mansion Tax’.
The concept of a Mansion Tax first emerged in 2009 as a proposed tax aimed at imposing a levy upon all properties valued at more that £2 million which would then be subject to annual tax rates of 1%. As an attempt to avoid the introduction of such a tax, the newly modified stamp duty slab system was seen by many as an alternative as it significantly affects only those buying properties at higher prices.
Now that the threat of this tax has diminished, it is likely that house prices, particularly those in the prime property market in London, will rise as people who put off buying as they waited for the election results, particularly overseas buyers and investors, should now go ahead with their plans.
The impact on the London property market will arguably filter out nationwide and we should see greater movement across the marketplace thanks to greater certainty over economic policy as the Conservatives remain in power.
While we should see confidence return and prices rise, particularly in the short term, buyers should be prepared for realistic price rises. It is true that many vendors held off on sales during the run up to the election, but it is also notable that many vendors had sale dates of 11 May, regardless of the result, meaning the quantity of housing stock available may limit price rises, as supply is likely to outweigh demand.
Similarly, over the last few months we have seen a downward trend in the London market, largely due to the impact of increased stamp duty charges, and while the announcement of the Conservative win will bring stability to the market, it will take time for the upward trend to bed in and for sellers to start to see the results.
As with any predictions on future markets, only time will tell how the election result will ultimately impact the residential property market. For now it seems that, although unexpected, the election result should bring continuity, stability and confidence to the market both in London and here in the North East.
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