Unemployment less likely to affect house prices

It has already been commented about the possibility of unemployment having a bad effect on house prices in the recession. But this is unlikely to outweigh the positive effects lack of supply is having on the prices.

The government is now admitting that long-term unemployment is going to be much lower than predicted resulting from this recession. Companies in the private sector helping to handle long-term unemployment were told that they should expect an average 450,000 people, but this has now been cut to 250,000.

House prices will not be pushed downwards by unemployment, and we must now await the election in order to find out what level of public sector cost reductions we will see from the winning party.

There has been talk of a 10-20% reduction in public sector spend which would put 1 million people on the dole, and if so this would have taken peak unemployment to 3.75 million. This is not going to happen to such an extent though based on previous findings.

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By the time this reduction would take place , the recession would most likely be coming out the other side and employers who had to lay off staff in September 2007 are actually starting to hire staff again as business picks up again.

This is good news for the property investment industry if anyone is hoping to invest in property soon. If the economy begins to pick up, property prices should also rise consistently again.