The Year Ahead
We asked one of the country’s top futurists, Dr Patrick Dixon, to take a look at the year ahead, and answer a few questions on what he thought would be in store for us! 1. Economy?
”These are exceptionally hard times. We are probably around half way through the current crisis – this has been going on already over 18 months. We can expect a tough 2009 and things to start picking up in 2010. Companies that make redundancies early and have conserved cash will do well in the upturn: having spare cash available to buy up other companies or assets at knock-down prices. A lot of fuss has been made about the fall in the pound but this will be really good news for companies that sells goods or services outside the UK, this will also mean that people will spend more at home – whether on holidays or other things.” 2. The UK housing market! do we sell up or stay put? Should renting be a good option right now? Will housing become realistically affordable again?
”Each person’s circumstances are totally unique but here are some general thoughts. The market is most likely to continue to fall sharply, but it should eventually bottom out. The more it falls, and the lower mortgage interest rates go, the more likely it will be that we see a rebound and a strong recovery, as many will decide to come back into the market or enter for the first time. A lot has been said about mortgage markets changing forever, but that is unlikely. The fact is that the mortgage market will eventually settle down, and will become more attractive and competitive again. Once lenders become convinced that we are in the early stages of a long and strong property price recovery, the loan to value ratios become more relaxed, and the return of 90% mortgages. Home loans are the highest and most important financial transaction most will do in their lifetimes apart from personal pensions, so will become once again a very important part of retail financial services.
”The cost of buying or selling is high with legal fees, stamp duty and the rest. Rents have not fallen as quickly as house prices yet in many areas so renting is more expensive than you might think. Housing is much more affordable than for years – we have seen salary inflation of 3.5% or more in the last 2 -3 years, while actual property prices have also fallen up to 15%. Put the two together and you have about 25% fall in costs – and this is before mortgage rates started falling, already by 30% in some cases. If you look at the whole picture it’s most likely that in the next 6 months we will see some great bargains, with an actual cost of ownership per month of less than half what it was just 18 months ago. First time buyers will still need a bigger deposit than in past. Remember too: most people own to live in a home and not for a 2-10 year investment. It is vital to take a long term view in all property decisions.” 3. Jon Market.. what kind of industries are the most likely to make high job cuts? What are employment chances like right now if you lose your job?
”Retail jobs will be very hard hit in January to June as reality starts to hit home. McDonalds, Lidl and some others trading at the bottom of their markets will do very well. There are many sectors which is surprisingly strong with 850,000 vacancies that are officially known about in December 2008. In previous downturns it has been unusual for well motivated and talented individuals to be out of work for more than a year.” 4. The credit/borrowing markets! will we be able to wean ourselves off our addiction to cheap credit? Will we learn the lesson and start to save more?
”These things are just cycles. We are about to enter a cheap credit boom, fuelled by the lowest borrowing costs in living memory. The result in the medium term is most likely to be another overshoot, high inflation, high interest rates, eventually leading to another crash which could happen by 2015. As we have seen – swings can happen very fast from one end to the other.”
To manage your money over the next few months, your age, those Britons concerned about their capacity to manage their money might want to consider applying for a cheap personal loan. By doing this, borrowers may find that they are able to merge various financial commitments into a single low-cost monthly repayment.
5. The world economy! what affect will the world economy has on us all? What about £ sterling and our travel/work abroad?
”The global economy will continue to lurch from event to event. All will be looking out for the price of the dollar. Despite this huge US crisis the dollar has increased or retained value against most currencies, as billions of dollars of US investments in many other nations are brought back to service debts and other priority commitments. Eventually the huge return flows will slow down. When this happens the question will be who will want to buy the dollar? Countries such as China have bought over a trillion of US dollars and are holding them for now. But what if they start selling? They cannot sell too many as this will force a dollar crash and the rest of their assets will be worth much less. But they could sell enough to force a gradual dollar decline”
Steve Smith writes for All About Loans. Visist us today to apply for cheap loans online, personal finance, and UK tenant loans.
- Steve Smith
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