We're all suffering - but who are the worst hit?
Rising unemployment, falling house prices... the struggling economy is having an impact everywhere. Samantha Downes looks at the regional variations
Saturday 29 November 2008
The recession is biting hard right across Britain, but some of us have been feeling the downturn much more acutely than others.
The recession is biting hard right across Britain, but some of us have been feeling the downturn much more acutely than others.
"The higher you climb, the harder you fall", the saying goes, and, as boom turns to bust, areas where property commanded the highest prices are those where an increase in repossessions has also been the highest.
The number of mortgage repossession claims filed in county courts rose dramatically in England and Wales year-on-year between June and September. The County Court in west London dealt with the largest increase in repossessions in the capital – 46 per cent more than during the same period a year previously – June to September 2007.
When compared to more deprived areas, such as Bow in east London, the number of repossessions still seems small at only 104. In Bow, repossessions only increased by 11 per cent but still totalled 624.
The commuter towns of Guildford in Surrey and Newbury in Berkshire saw among the largest rises in the South-east. Repossessions there were up 47 per cent and 52 per cent respectively. Ipswich in Suffolk, an area dubbed as a potential up-and-coming commuter town, was up 54 per cent to 176.
But this pales in comparison with a 100 per cent rise in the Welsh beauty spot of Conwy & Colywyn and an 89 per cent increase in Aberystwyth.
Ed Mead, director at estate agent Douglas & Gordon, says areas that experienced enormous price increases in 2007 were among the worst hit by the property crash.
"When credit was freely available, many City workers raised large mortgages and invested their bonuses in stocks and shares. Now the economy has turned, mass redundancies are here and those stocks and shares are worth less – leaving many people with a mortgage they no longer can afford."
Mead claims that the Government did not do enough when prices were rising. "Gordon Brown made it attractive for non-domiciled residents to buy in London, he didn't bank on them snapping up the best properties in Chelsea.
"This forced domestic buyers into surrounding areas which carried a hyper-inflated price tag. Having high mortgage repayments on a property in a less desirable postcode is a recipe for disaster.
"To avoid the worst case scenario, remain in contact with your mortgage provider and be transparent with your financial position," he adds.
"Keeping lines of communication open with your lender may help you negotiate some kind of settlement."
Repossessions and house prices do not necessarily correlate with each other. While there has been a greater rise in repossessions in the South-east, house prices actually fell the hardest in the East Midlands. Prices there dropped by just over 7 per cent between September 2007 and September 2008, compared with 4 per cent in the South-east of England.
The figures, produced by Communities and Local Government and released earlier this month, only include data based on mortgage completions and show that in Northern Ireland house prices fell by an average of 15 per cent.
Anecdotally, estate agents believe prices will fall for another 12 months – evidence of this is a dramatic slowing in the number of houses purchased in the past few months. Jon Neale, head of development research at Knight Frank LLP, says that during the three months from July to September, Sittingbourne in Kent experienced the biggest fall in property sales compared with the same period in 2007. House price sales there fell by 78.4 per cent. Other areas where purchases were down dramatically were Huntingdon in Cambridgeshire down 74 per cent, Weston- super-Mare down 71.7 per cent, Birkenhead down 71.6 per cent and Bebington down 71.5 per cent.
Neal points out that the average house price in the UK still stood at £208,583 in September and prices for flats and bungalows still rose despite the fall, 0.6 per cent and 0.7 per cent. If you have a detached house you may yet be in luck, these types of property still command a premium, rising by an average of 1 per cent.
Unemployment is predicted to top 2 million by the end of the year. In the past week more than 30,000 people lost their jobs and last month unemployment figures published by the Office for National Statistics showed the largest jobless jump in 16 years. Between June and September alone, 140,000 lost their jobs and the number of people receiving jobless benefits rose by 36,500 to 980,900.
Despite huge cuts and further more expected in finance and banking alone, unemployment was still lowest in the South-east of England, where 0.5 per cent of adults over 16 are claiming benefits.
You are still less likely to have work if you live in the North-east of England, where 1.2 per cent of adults are jobless, or if you live in Wales, where 1 per cent of those over 16 years of age have no paid work.
The impact of the 25,000 expected job losses through the closure of Woolworths, and the slashing of jobs at Citigroup will take time to filter through to the jobless figures, so these figures will rise.
This regional split in unemployment is largely industrial. Manufacturing jobs, which tend to be based in the North-east, have been hit, in the past year 55,000 jobs in this sector have been shed.
Public sector jobs remain recession-proof, vacancies in health, education and public administration have risen in the past year and Gordon Brown's plans to borrow millions to keep public-sector projects going could help stem some of the job losses in the South- east. Already, the Training and Development Agency for Schools is reporting a surge in teaching applications from former bank and finance professionals.
And the construction industry is hoping to prevent an expected 300,000 job losses in the coming years by persuading the Government to bring forward construction projects. The Royal Institution of Chartered Surveyors predicts construction employment could fall by about 14 per cent – around 300,000 job losses – unless some action is taken. Unchecked, this would be a repeat of the problems faced in the early Nineties when the number of people employed in the industry fell by 342,000 from 2,236,000 to 1,894,000.
Simon Rubinsohn, RICS chief economist, says the projects could include building schools, rail upgrades, social housing, hospital building and light rail and tram schemes.
Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk
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