Public sector job cuts will hit house prices.
Public sector cuts will hit house prices
Published: 19 August, 2010
UK: The biggest falls in property values are expected in regions where the state is the largest local employer.
According to research from Hometrack, these areas have been warned about falling house prices as the gap widens between state and private sector property markets.
Analysis by Hometrack for the Guardian newspaper showed those areas of the country with the highest proportion of public sector employees are already seeing homes sell significantly further below their asking price than elsewhere. Hometrack said the findings are an indicator of stagnating and even falling prices in areas such as Aberystwyth, Rhyl and Morpeth in Northumberland.
Properties there went for an average of 91.5% of their asking price in June. Based on its monthly housing market surveys Hometrack puts the national average at 94.3% while it is 95.4% in those travel-to-work areas least dependent on public sector jobs, which include Basingstoke, Newbury and Wycombe and Slough, in the South East.
Although most of the cuts are still to come, householders say they are increasingly worried about the economic outlook and many fear for their jobs, particularly those employed by the state.
The Chartered Institute of Personnel and Development think-tank estimates that the spending cuts will make 750 000 public sector workers unemployed and push the national jobless total close to three million for the first time since the early 1990s.