Chancellor takes axe to public sector

Statistically we are told that one in five of the working population are employed in the public sector. 25% cuts to public sector departments will not result in just one bread winner in a family loosing their job but in some cases may lead to both being out of work. It is impossible to overstate the impact that this could have on the housing market particularly in large parts of the north west of the country where nearly 700,000 people work directly for the state.

Over 6 million people are employed in the public sector – not counting those private sector jobs doing work for the state. That’s one in 5 of the working population. If 10% were to loose their jobs as part of the coalition cut backs this would be 600,000 people.

Of course not all would have to sell their home to move to find new work or indeed because they couldn’t afford to stay put but remember that in the whole of last year just 850,000 homes sold across the UK.

A recent report from Savills (mid-to top end estate agents) said that around 8% of their sales in London and the Home Counties were to public sector staff but that figure soars to 24% in northern England and 20% in Scotland. The figure in the South West is not too different at 23% all of which confirms my fears that it will be the regions who suffer most. 

Whilst house prices will remain insulated due in part to overseas buyers in London and the South East – despite this region having the largest number of public sector employees (source ONS) I expect prices to come under real pressure elsewhere. City centres like Leeds and Manchester where we have already seen the Buy-to-let sector suffer as demand for Ikea-style flats has fallen will not be the only market that struggles as the axe falls on both direct and indirect public service employees.