Goodbye 2010...Hello 2011

The closing of 2010 has seen some serious economic turbulence, much like the weather that has gripped the UK in a frozen stalemate, airports unable to functions, rail and roads literally frozen to a standstill in parts of the country.

The prevailing wind that brings in 2011 promise no warmer news.

The Bank of England is expected to start the process of increasing the interest rate. All the signs are that the interest rate may be increased on a ‘step-increase’ basis. The eventual destination of the interest rate, by the end of 2011 could a good few percentages higher than at the start of 2011.

The results and direct expected consequence of the interest rate rises are likely to be even tougher lending policies by the banks, squeezing the property sector even harder. The residential sector is likely to be hit hard, particularly where first time buyers are concerned.

The commercial sector will no doubt slide further into larger number of voids saturating the market and landlords increasingly being forced to embrace the tag of the ‘reluctant landlord’.

The flip side will inevitably be the need for landlord of commercial property portfolios  to seek and be guided by careful advice and management of surplus void properties. The increase in the number of such portfolios will in all likelihood drive down prices in the commercial property market which in effect could open up opportunities for private investors to group together into small quartets/quintets, pooling together a pot to invest into a 'bespoke property pension fund'. The demographic age of such investors is usually post mid 40s with a sizeable chink of savings sitting in a interest paying savings account or nominal pension scheme.

The vat increase in January 2011 is likely to the most obvious and immediate pinch in the pockets and wallets of the consumers as retailers mark up prices following the Christmas/January sales bonanzas.

All in all in 2011 is likely to be no less tougher or challenging than the past year (or three) have been. Prudence will have to prevail and wear her hat in a manner that dues not get blown away by the chilly winds that blow out 2010 and bring in 2011.