What Impact Will The Spending Cuts Have On Buying And Selling In 2011?

Well we all waited and waited for the 20th October to come and now it’s happened, I am not convinced that we are any closer to understanding and working out the impact on the property market next year now we know the spending cuts!

With property, the key effects, whether you want to undertake a self build, rent for the first time, or trade down for the last time, are down to confidence in the market and supply and demand.

If you are buying and/or selling property or land, then you are mostly impacted by confidence in the market and the number of people looking to sell or buy property. An ‘influencing’ factor would be the supply of mortgage finance and this in turn is affected by your income which is indirectly affected by the job market.

To fully comprehend the knock-on effect of spending cuts on the property market, the following questions need to be asked:-

Will the spending cuts pressure homeowners to sell their property?

Currently we are only selling half as many homes pre credit crunch and this budget is likely to ensure that less people are inclined to sell up and move on as their confidence in the future won’t be very high, so they are more likely to ‘stay put’, unless they are forced to sell.

Will the job cuts force people to sell their homes?

In the main the job cuts are expected to hit women and will be spread over four years. It is likely they will increase repossessions next year, but not in vast amounts. The likelihood is that job cuts in the private sector due to reduced government spending, will bite next year, so there will be more stock available, which will drive prices down.

Will the spending and job cuts stop people buying?

The media chatter and threat of more job cuts is likely to put people off buying at least until Xmas if not beyond, consequently it’s likely that buyers will be few and far between next year.

Impact of the Spending Cuts on Buying and Selling Property in 2011

Overall the property market will split in two across the country next year. Those regions hit very hard by local authority and government spending cuts, job losses etc, will likely see their property prices dip as demand remains to be low and more people try to sell their property.

Essentially should you really want to sell your home, only look to do so if you’re trading up, so you save more money on the next property or if you have to sell.

If you’re looking at buying as a first time buyer, you might get a good deal. You should carefully assess the true market value of the property, then if you can get between 10-20% off, this should protect you from further falls.

Need a checklist to buy and sell a property?

Key Government Spending Cuts Announced:-

About 490,000 public sector jobs probably be lost

Average 19% four-year cut in departmental budgets

Structural deficit to become eliminated by 2015

7bn in additional welfare budget cuts

Police funding cut by 4% a year

Retirement age to increase from 65 to 66 by 2020

English schools budget protected; 2bn extra for social care

NHS budget in England to rise every year until 2015

Regulated rail fares to rise 3% above inflation

Bank levy to be made permanent

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