Savills says non-dom tax could harm 2008 housing market

Published 12th Mar 2008

Savills, the property consultancy and estate agency business, waded into the non-doms debate saying that how hard the tax is levied could be critical to the performance of the housing market in 2008.

The Mayfair-based firm said that "reassurance that the taxation of non-domiciled residents is not going to be too onerous" would be one factor that would be critical to the sector in 2008.

Further interest rates and how quickly capital markets return to liquidity, will also be key factors behind a return to house price growth.

Savills has given warning that prospects in both the residential and the commercial property markets will hinge on how quickly confidence returns to the financial markets.

However, Aubrey Adams, group chief executive of the group told Times Online that the current problems in the market were "nothing like the early 1990s" recession. "It's absolutely nothing like that. In the underlying market there is still some very good news".

House prices at the very top end of the central London market saw growth of 29 per cent in June 2007, fuelled by record City bonuses. However house prices fell by 2 per cent during the last quarter of the year.

Turnover in the new homes market was also “noticeably down” in the last quarter of 2007 as demand from buy-to-let landlords and other investors tailed off.

Mr Adams said that the housing market cooling was taking longer than expected and that instead of seeing a return to house price growth in 2008, Savills was now predicting a static market or even a small fall in house prices in the current year exacerbated by the reluctance of homeowners to put their properties on the market.

Peter Smith, chairman of Savills, said: "2008 will be a challenging year for the property industry worldwide. However not all segments and geographies will be affected equally."

Angela Jameson

Source: ' BBC News '

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