Friday, Aug 27, 2010
If you work in the public sector dont bother applying
Bloomberg: House prices face cameron chopping block
“It was going to be hard enough to save the money for a deposit,” he said. “But now, if you go to the bank to ask about a mortgage and you tell them you’re in the public sector, they make you understand that it just isn’t worth it.”
Posted by jonboy @ 08:52 AM (1280 views) Add Comment
12 Comments
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1. str 2007 said...
I wonder why private business doesn't flourish in Wales, North East etc ?
Agreed they're further away from London, but so much these days can be done via email, video conferencing etc.
Wages and premises are alot cheaper, two of the biggest overheads a business faces.
In some ways it's right that Government should push it's work out to these areas to save tax payers money, but you have to question whether it's wise to have such a big percentage of the workforce in one area emloyed by the Government.
2. mark wadsworth said...
Tee hee.
@ STR, please remember that nearly a quarter of the London workforce works for the government in one form or another, and these tend to be the higher paying public sector jobs. So pots, kettles.
3. mark wadsworth said...
The article says "a fifth" but that excludes all the fakecharity and lobbying sectors.
4. cyril said...
Everyone seems to think that London will be immune from these problems but if you look at the employment statistics, London is not much different from the rest of the country. Plenty of public sector workers in the civil service, local authorities and the head offices of all the quangos that they are keen to abolish. Also where is unemployment highest in the UK? The London Borough of Newham.
5. uncle tom said...
Great quote in this piece:
“Our sales have dropped off a cliff in the last couple of months,” Mountain said.
6. str 2007 said...
UT
Well spotted.
There's no doubt a calculation tha would relatively indicate the percentage of civil servants required.
My gut feeling is that it shouldn't be more than 10% of the workforce bearing in mind it's only a percentage of the tax I pay that goes to pay them.
Now I don't know what percentage of my tax goes to pay them but if it was 30% and I pay 30% inc NI then that's pretty close to 10%.
Obviously there are lots of other taxes VAT, Fuel Duty, Stamp Duty etc. etc. so maybe the ratio can afford higher but 20 or 30% of the workforce seems very high.
(Not relavent to this article but I clicked the ING mortgage ad below and it seems they're lending 4 times joint income, so providing interest rates don't go up, I wouldn't hold out much hope for house prices getting down to 3.5 times a single wage)
7. Cool_hand said...
“I’ve just given up,” Hillier, 24, a clerk at the local council in Caerphilly, South Wales, said in an interview. “I know my head’s going to start being on the chopping block.”
He's only 24 and he's upset that he can't buy a home. What is wrong with these people?
8. brickormortis said...
I tell you again, house prices in Shropshire are down by around 15-17% from their peak and are only selling when prices are more like -20% from peak. e.g. Two bed flat in Telford asking £129,950 as standard now looking at around £109,950 (and not selling). I looked at new 2 bed flats last year adn they were asking £140,000 new! Madness. The idea that in the UK we can say that WE have only lost 8% on value of homes from peak is a nonsense.
9. uncle tom said...
Note the change in tone in pieces like this..
..no longer are we getting every bit of news spun to justify higher houses prices - instead we're getting the line that house prices are falling, and it's all someone else's fault - in this case the government's deficit reduction plan.
This acceptance that house prices really are on the retreat, not because of an event that was perceived to be transient, like the banking crisis; but because the country can no longer afford to pay so many salaries, and so many benefits, and won't be able to, for the forseeable future; is likely to have a persistant impact on market sentiment.
This change in sentiment is not likely to provoke a wait and see attitude among BTLers and other speculators, and vendors will lack the confidence to hold out for high asking prices.
Once the YoY stats go negative again, the talk will be of negative equity, and debates as to 'how low can it go'
Meanwhile potential BOMAD providers, who generally don't give their savings to their offspring, but lend the money to get them out of the door; will rightly start to worry that their precious savings will be rapidly wiped out, as prices fall further.
It all points to the gathering storm, the accelerating decline in prices..
10. sibley's love child said...
“Given this squeeze on incomes and uncertainty over people’s job prospects, it’s perfectly probable and desirable that house prices move back down,” he said.
Thank you, Ed Stansfield of Capital Economics; I salute thee.
11. nomad said...
I'm more convinced by UTs change of sentiment argument than of str2007s income multiples.
It was sentiment that drove the market up in the first place: the compulsion to get on the ladder; the fear of being left out. That is now rapidly changing to the fear of being left with a depreciating asset.
This doesn't mean that life will be all roses for the many of us who are renting. The standard tenancy agreement is still for 6 months then 2 months notice from the landlord. So when they share UTs change of sentiment (soon), they will be selling and sending out those notices.
This happened to us 2 months ago and we are now on the standard lease as described. If our landlady bought the house outright then our rent is giving her a 5% return before tax, not a lot if the value plummets by 25%.
I may buy a tent so we can wait for the bottom.
12. drewster said...
Definitely agree with nomad. Sentiment is incredibly important. Look at America where sentiment has turned strongly against housing. We're starting to see the turn here too. Confidence is linked to sentiment - if people aren't confident about their jobs, they won't buy a house. If people aren't confident that the banks will lend them money in hard times, then they'll stop spending and start saving for a rainy day. This government, for better or worse, is rapidly destroying confidence (at least until the October spending review).
Incidentally, one day we'll see sentiment turn against bonds too. But that's a while away yet.