Some parts of the country that are likely to see public sector job cuts, are being warned to prepare themselves for their home to see a reduction in value. This news comes after research revealed a widening gap between state and private sector property markets. The research has shown that the areas of the country with the highest percentage of public sector employees, are already seeing properties being sold significantly below the asking price than elsewhere in the United Kingdom. This is believed to be an early indication of static or even worse, falling prices in areas such as Aberystwyth, Rhyl and Morpeth in Northumberland.

Richard Donnell, director at the firm that carried out the research said “In housing market areas with a high proportion of public sector employees, the underlying strength of the housing market has been weaker than the national average. These areas look set to weaken more than is the case with areas with fewer public sector employees. There will be a widening gap. This indicator tends to move before prices – as soon as agents see pricing weakening they will tend to start looking to adjust pricing of new instructions to a level where sales volumes can be maintained – it isn’t for another three to four months or longer that actual achieved price falls start to feed through.”

With the majority of cuts still to come, recent surveys suggest the coalition’s financial squeeze is already hurting consumers. Households are increasingly worried about the economic outlook and many of them fear for their jobs. Homeowners are being urged by insurance companies to maintain payments on household insurance policies, as getting in arrears with monthly payments could invalidate the policy. A think-tank estimates that after all the spending cuts are made, it will leave 750,000 public sector workers unemployed, and  this will push the national unemployment total close to the  3 million mark for the first time since the early 90s.