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LuckyOne

Cameron ‘Chopping Block’ May Worsen .....

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Even the VIs seem to have given up.

http://noir.bloomberg.com/apps/news?pid=20601109&sid=aZG1tHAD.wmE&pos=10

Evan Hillier knew his ambition to own a home would mean years of saving. With his job threatened by U.K. government spending cuts, it may now be impossible.

“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.”

About 9 percent of government employees may lose their jobs by 2015 in Prime Minister David Cameron’s drive to tame the U.K.’s record budget deficit. With at least a quarter of working people in Wales and northeast England and almost a third in Northern Ireland on the nation’s payroll, spending cuts may further blight a housing market already losing steam.

“There is no doubt that the sort of plans that have been outlined will have some impact on the housing market,” Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said in an interview. “Our indicators suggest that Northern Ireland stands out as being particularly vulnerable, as do Wales, the Northeast, and the Midlands.”

Cameron’s Conservative-led coalition government unveiled an emergency budget on June 22. It will announce an austerity program on Oct. 20 that will slash most departments’ budgets by a quarter to tackle a deficit that hit a postwar high of 11 percent of gross domestic product in the year through March. The Treasury’s fiscal monitor predicts 490,000 public-sector jobs will be lost by April 2015.

‘Jilted’ Market

“The coalition government’s announcement has jilted everyone,” said Christopher Hall, a real-estate agent at Rettie & Co in Edinburgh, capital of Scotland, a region where the government employs a quarter of the working population. “There has been a new dose of realism and an air of caution amongst the public. There’s no doubt it’s having an impact on the market.”

U.K. house prices averaged 168,719 pounds ($263,000) in the second quarter, 8.4 percent lower than at the property boom’s peak in 2007, according to Nationwide Building Society, Britain’s biggest customer-owned lender. London values have fallen the least, with a 4.4 percent drop, compared with 5.5 percent in Scotland, 9.3 percent in Wales, 11.5 percent in northern England and 43 percent in Northern Ireland.

Regions with higher proportions of government employment are particularly vulnerable to further declines because of the extent of Cameron’s budget reductions, according to Miles Shipside, commercial director of Rightmove Plc, the operator of the biggest U.K. residential property website.

“The scale of job cuts they’re talking about could have a pretty concentrated effect,” Shipside said.

Asking Prices

Home sellers in Britain lowered asking prices by 1.7 percent in August from the previous month, the most in eight months, Rightmove said on Aug. 16. Shipside predicts house prices won’t rise in the next two years.

Ed Stansfield, an economist at Capital Economics Ltd. in London, predicts house prices will drop by a quarter over the next 2 1/2 years.

“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.

Tighter credit terms provided by banks mean the Bank of England’s record-low interest rate of 0.5 percent gives only a limited boost to demand. Banks are approving less than half the number of mortgages they did at the peak of the housing boom. They also now typically request a 25 percent cash deposit for the best loan deals, excluding many first-time buyers.

Peter Mountain, a real-estate agent in Lincolnshire, northeast England, says demand in his area has plummeted. His premises in the town of Louth are just five miles (eight kilometers) from offices of the local council, the biggest employer in his district.

Gloomy Outlook

“Our sales have dropped off a cliff in the last couple of months,” Mountain said. “I can’t see any light at the end of the tunnel.”

In London, where the government employs about a fifth of workers, house prices may still benefit from overseas demand and the strength of businesses in the capital, said Robert Green, a real-estate agent at John D Wood & Co. in London.

“The central London market is going to be more insulated than other parts of the country,” Green said. “London is a world city and there’s a lot of people who want to be here and most of them don’t work for the public sector and aren’t really affected by it.”

Some economists predict that the impact of government job losses, declining consumer confidence and restricted lending means that even London’s housing market won’t be immune.

“All the evidence over recent months is that confidence is pretty fragile across the economy as a whole in the housing market in particular,” said Capital Economics’s Stansfield.

For workers like Hillier, there’s little point in even thinking about buying a home right now.

“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.”

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"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."

What's this?

A second credit crunch just for the public sector?

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“Our sales have dropped off a cliff in the last couple of months,” Mountain said.

I shouldn't laugh at this really because it's not funny for Mr. Mountain, but cliff....mountain...sorry, it's Friday :lol:

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“I’ve just given up,” Hillier, 24, a clerk at the local council in Caerphilly, South Wales, said in an interview.

bit young to be buying sonny, dont you know the average age of the first time buyer is around 34?

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I could print this out, stick it on the heads of every EA and public sector worker in Wales and they still would not get it.

I thought about your trials and tribulations when Rubinsohn mentioned Wales. It doesn't seem that the message has trickled down yet but I expect that it will once reality hits.

In my areas of interest, the number of desirable houses (to me anyway) coming onto the market seems to be increasing materially. Asking prices are still too high by about 20% though when running them through very local indices.

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bit young to be buying sonny, dont you know the average age of the first time buyer is around 34?

....yep...at that age he should be sailing a raft round the world..... :rolleyes:

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in northern ireland there are two camps

public sector workers and/or home owners who in the main are in denial and because houses that are selling are 40-50% off peak ( which was ludicrous bubble territory - i mean at one stage northern ireland was almost neck and neck with south east of england for feck sake ) have fallen 40% they cant fall no more. these are also the people that think their houses are different and must only be down 10% :lol:

and those that are self employed / private sector / non home owners who in the main have been feeling the pain for ages while the public sector gravy train rolls on , and who know whats round the corner

i just hope it doesnt get so bad that their is civil unrest.....

all Cameron is doing in these parts of the UK is bringing house prices down to where they should be

should the banks loan cash for property owners in ireland to speculate and keep the ponzi going or to private businesses to build and fill the gaps where public sector jobs ( are rightfully ) going to be culled............ tough call. not.

good man DC keep it up !

Edited by getdoon_weebobby

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Definitely far more For Sale signs to be seen out there. At the same time, I pass a dozen new builds once a week or so that are have for the most remained unsold since mid 2008.

Seems to be a stalemate out there, with buyers refusing to buy at current prices and sellers unwilling to reduce their property's price. Wonder how long this stand-off can go on?

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  • 261 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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