The uncertainty surrounding the 7 May vote will continue to hold back the very top end of the capital’s luxury property market in the next few months, the upmarket estate agent added. Would-be buyers are sitting on their hands, because Labour has pledged to to introduce a new levy on owners of homes worth more than £2m to raise £1.2bn for the NHS if it wins the election.
Savills said: “The general election and the potential implementation of a ‘mansion tax’ thereafter has had the expected subduing effect on buyers, albeit that we have seen registered buyers per listed property rise since the low point around the Scottish independence vote in the summer.”
Experts reckon at least 80% of homes that would be subject to the tax are in London and the south-east. The shadow chancellor, Ed Balls, has said there would be four levels of mansion tax, with the lowest band for homes worth between £2m and £5m. At the top end, billionaires splashing out £100m or more for a huge mansion will pay the most.
The middle part of the London market – homes worth between £1m and £2m – remains robust, Savills said. Across the rest of the UK, sales are rising, particularly of homes worth less than £2m.
The bottom end of the capital’s housing market - homes worth £500,000 or less - has been hit by tighter mortgage rules. Savills does not operate in this area but its rival Foxtons, which does, said last month that 2014 profits would fall because of a sharp slowdown in the capital’s property market.
Savills is still confident it can meet its forecasts for this year. Sales in Hong Kong and Singapore have also been hit by levies on expensive homes, but other Asian markets such as Japan and Australia are performing well and its recent US acquisition Studly has beaten expectations.
Analysts at Numis said: “Savills’ update shows that whilst some of its core markets remain challenging, it is on target for a strong year with 20% profit growth forecast.” They reckon Savills will make pretax profits of £90m this year and £105m in 2015.
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