Prime central London prices could fall as much as five per cent after the election next year if the result means a Labour or Liberal Democrat influenced government would introduce a mansion tax.
That's the view of high-end agency Savills which says that even if such a tax was introduced, central London prices would rally in 2016 and thereafter.
The agency's forecast for next year - one of the last to be made by the agencies with major residential research teams - shows that mainstream average house price growth will slow to two per cent with Greater London flatlining.
Stress testing of borrowers' ability to service a mortgage and loan to value lending caps will increasingly limit the amount buyers can borrow, making it more difficult to access or trade up within the market warns Lucian Cook, Savills' head of residential research.
Not only will this suppress price rises, particularly in London, it will also reduce the potential for transaction volumes to return to anything close to a pre crunch norm he predicts.
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