Public sector cuts will hit property prices
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Property prices in areas with high rates of public sector employment are set to take a disproportionately hard knock over the coming months, research by Zoopla.co.uk shows.
Topping the list of local authority areas most likely to be negatively impacted is Oxford, where almost half of all workers, 46%, are employed in the public sector.
Average house prices in Oxford have already fallen by almost 4% over the past three years to a current level of £326,396.
Not far behind, and also likely to see falling houses prices as a result of the public sector cutbacks, are Cambridge, Middlesborough, Hastings, Canterbury, Stafford and West Dorset –all areas where public sector employment accounts for over 40% of the workforce.
At the other end of the scale, the areas least likely to be impacted by the cuts are the ones where public sector employment rates are significantly below average.
This includes the City of London where only 4% of workers are employed in the public sector and average house prices now stand at £468,962, up over 3% over the past three years.
Other local authority areas where property prices may be only marginally impacted by the cuts include Crawley, Corby, North Warwickshire, Broxbourne, North West Leicestershire and Bracknell Forest–all places where public sector employment accounts for under 15% of the workforce.
Nicholas Leeming, Commercial Director of Zoopla.co.uk, says: “The country is braced for extensive cuts to government spending and a significant number of public sector job losses are anticipated over the coming years.
“In areas where more people are employed by the state, rising unemployment will lead to more homeowners struggling to pay their mortgages as well as dampening demand from buyers, which will put downward pressure on house prices in these areas.
“House prices are likely to be far more resilient in areas with a smaller share of public sector employees.”
James Moss, director at Curzon Investment Property, says the public is growing increasing tired of hearing how is everything is down to the mess Labour left.
He says: “The fact that we have seen no coherent policy to fix Britain’s housing crisis is very worrying indeed, particularly to investors. While prime property has held its own, first-time buyers are worse now than ever, particularly given how prices and taxes are going up.
“For many thousands of people, subsidised housing part-funded by local authorities was a vital way on to the housing ladder. Similarly, the kick-start funding offered to schemes around the country at least helped ensure some new homes were built. But with construction at a standstill and mortgage lending going down, the market is being choked from both ends.”
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