Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Cameron ‘Chopping Block’ May Worsen U.K. House-Price Slowdown

Home sellers in Britain lowered asking prices by 1.7 percent in August from the previous month, according to Rightmove. Photographer: Jason Alden/Bloomberg
Home sellers in Britain lowered asking prices by 1.7 percent in August from the previous month, according to Rightmove. Photographer: Jason Alden/Bloomberg

Aug. 27 (Bloomberg) -- 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.”

To contact the reporter on this story: Svenja O’Donnell in London at

To contact the editor responsible for this story: John Fraher at

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.