In May of next year, British voters will once again head to polling stations nationwide to vote in the general election. And while the political scene is uncertain at the moment with results difficult to predict, the election itself can have a sizeable impact on the property market.
Particularly when the result of the election is uncertain, the property sector can go into a period where buyers and sellers alike are unsure of what to expect, and this can cause changes to how it behaves. We look at what effect the upcoming general election may have on the prime property market with just six months to go.
In the run up to the election, it is likely that uncertainty, particularly surrounding the mansion tax, will see property prices falling as people adopt more of a wait and see approach, deciding to hold off on parting with their money until they know how the government in power will affect the market.
Savills predicts that this will mean property prices dropping by an average of 0.5 per cent in the first part of 2015 as demand starts to tail off from where it has been throughout the majority of 2014 and 2013 before it.
Following the uncertainty in the lead up to the election, though, it's likely that the price of prime property in general - including all homes in this band and not just £2 million plus - will start to pick up again. Demand will return to the market and we will see it hit a healthy rate of growth once more.
Predictions say that in the aftermath of the election, price rises will be in evidence across the UK prime market once again, which should continue for a number of years. Over the course of five years, Savills predicts that the average price of a prime property will rise by some 23 per cent or thereabouts.
The mansion tax
Should the Labour party win a majority in May, leader Ed Miliband has promised that one of the policies he will implement will be the controversial mansion tax.
Labour wants to levy a tax on all properties that cost more than £2 million. However, with the number of these properties having grown substantially in recent times, it will be the case that more homeowners than expected are subject to this charge.
What this could lead to is a reality in which homes that are sold at around this price which would go for a price of more than £2 million will now be sold for slightly below the threshold in order to avoid the tax.
Savills says that this might mean we see five year growth in £2 million plus property prices hit negatively, dropping by as much as five percentage points.
"Two out of the main political parties still favour some form of mansion tax so owners and buyers will be rightly factoring it into their decisions as the election approaches," said Sophie Chick, senior research analyst at Savills.