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12

Figure 2: Year-on-year change in average house price

Source: Knight Frank prime central London Index, ONS House Price Index

Comparatively slower growth at the high end of the market is expected to continue in the short and

medium term. This is partially due to political uncertainty leading up to the May 2015 election and also a

result of the appreciation of sterling. Additionally, even those buyers at the top end of the housing

market are opting for lower priced properties in anticipation of heavier taxation on properties valued

above £2m.

3

Table 5 presents various forecasts of price growth in the high-value market. However, all

forecasts assume no further changes to the taxation of high value property. In other words, the below

forecasts will apply only if the mansion tax is not implemented.

3 Based on Knight Frank’s

Prime Central London Report

0%

2%

4%

6%

8%

10%

12%

Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14

High-value properties

UK average

© Centre for Economics and Business Research