A Labour victory in next month’s general election will have a negative impact on the UK housing market in the short to medium term, according to Zoopla.
Research by the online property portal shows house prices have grown by an average of 11% under the current government – the equivalent of £26,372 a year.
Zoopla puts the recovery of the housing market down to initiatives from the Coalition government, including planning reforms, Help to Buy schemes, Funding for Lending and an extensive Stamp Duty overhaul.
But these gains, which have pushed up the average value of a UK home to £264,934, could be reversed by a Labour government.
Responding to the launch of the Labour Party manifesto, Zoopla’s public relations chief Lawrence Hall says: “Labour’s proposals for a punitive tax on homes and restrictions on some of the first-time buyer support systems would create uncertainty and could pull the rug out from under the feet of recovery and dampen market confidence.”
He points out that Labour leader Ed Miliband’s plans to restrict banks and buildings societies that accept deposits under the new Help to Buy ISA could limit the support offered to first-time buyers and eventually kill off the initiative.
And Labour’s proposed mansion tax on properties worth more than £2m will likely have significant consequential effects on the entire housing market, according to Zoopla.
The side-effects of the tax would include a reduction of prices at the top end of the market, as well as deterring foreign investment and driving increased competition for middle-class families below the threshold where there is already a shortage of stock, says Hall.