Nationwide Building Society says housing prices will remain firm, with a 5-8 per cent rise during the year contributing to a rise in house prices of 120 per cent since 1996.
In my mind, it is inevitable that property prices will fall but we must remember that the demographics of house-buying are very different from years before, with single people and same-sex couples driving the market.
Gone are the days of an average housebuyer being a man, woman and two kids.
A required tightening of monetary policy to hold back inflation will force the monetary policy committee to raise interest rates again early in the year, which will add to the thousands of people who pay more than half their monthly income towards a mortgage. But will the attractions of investment in property fade?
The introduction of UK Reits this month will whet the appetite of UK investors who have always clung to the “safe as houses – bricks and mortar” investment psychology.
New property investment opportunities will appear, enabling investment in housing associations, breweries, prisons and shops. These are all attractive and understandable for the UK investor.
What else is on the investment piste? Absolute return funds will be popular through the year, as will multi-asset funds.
It is intended that the proposed delivery authority for pension personal accounts will be put in place by mid-2007 and we should have a clearer picture of whether personal accounts will be attractive to those who have little or no savings.
I remember writing about “empty” stakeholder pension schemes. As anyone who has been a financial adviser knows, pensions need to be advised upon and sold. They are not and for years will not be a product that consumers rush out to buy.
By 2012, which could be the first year of the PA (well, we do abbreviate everything), pension compulsion could be with us.
IFA numbers will continue to increase through the year, as they have done since depolarisation. According to IFA Promotion, the number of IFA firms has increased by 10 per cent. IFA service companies will need to step up a gear with the launch of Paul Hogarth’s Paradigm while Michael Bolton’s Edeus will continue to push boundaries in the mortgage area.
As for compliance, we will see many changes this year, from the combined growing influence of the introduction of treating customers fairly and Mifid.
We will see the existing conduct of business rulebook replaced by new regime Newcob. This will implement the Cob requirements in Mifid and also the FSA’s own review which is designed to simplify the Cob regime and to move to a more principle-based regulation, with less prescriptive processes.
With the implementation of Mifid aiming to be in place by November, we wait with bated breath for the FSA’s decision on the retention of certain existing rules or as it is known, goldplating.
Talking about gold, what do I wish for during the next year? Liverpool FC, with its new owners, lifting the men in red from, at the time of writing, fifth in the Premiership with 28 points while keeping local boys Steve Gerrard and Jamie Carragher happy with silverware.
I hope this is the year that the FSA goes under the microscope to stop compliance being such a concern for financial advisers. One network I know has a total of over 300 people in its compliance team.
Met Life recently asked 100 advisers what worried them the most. The research shows that 47 per cent of advisers are most worried about legislative changes while 44 per cent say they are worried about keeping up to date with recent changes to offer clients the right advice.
Thousands of IFAs have the highest levels of integrity and customer service. My final New Year wish is for these firms. May they continue to increase in number and dominate the distribution of financial services and products.
Kim North (kim@tech andtech.co.uk) is director at Technology & Technical