Earn money from falling house prices by Finance News Bulletin

Published: 14/12/07

Experts may be predicting further house cost falls following another dip in principles during November But there is one way that you will be able to profit from the falling market in the New YearFraudsters have under attack the Daily Mail's Deputy Personal Finance Editor

How I was fleeced on my bank cardA complex asset fund will be launched in the UK in mid-January that aims to advantage from falling house pricesIt will do this by by complicated financial instruments called derivatives to bet on the extent to which the possessions market will drop over various time periodsCalled the UK Residential Index fund, it is the first of its kind in the UK

It is unique in that it will not actually invest directly in housing properties – houses and apartment complexes, otherwise known as 'bricks and gun' – but take bets on how the widely-recognised Halifax House Price directory (HHPI) will swing in the futureThe HHPI showed that house prices in November fell by 11%, the main decline since December 2006, and tipped as one of the reasons why the store of England decided to cut interest rates from 575% to 5

5% yesterdayThis follows waterfall in September and October, making it the first time the index has fallen in three consecutive months since 1995However, investors who are concerned about house prices and want to evade their bets will now be clever to cut some of their losses by investing in the fund, which is being set up by the financial arm of genuine estate agents Strutt & ParkerNick Harvey-Jones, from Strutt & Parker Real Estate monetary Service, said: 'People are worried about falling house prices and are not certain what to do about it

But it can take months to buy and sell a house, whereas with us you can now invest in the house price index and withdraw whenever you want to'He additional that the firm believes that, although the enlargement in house prices will continue to slow over the foreseeable future, they will not fall outright next dayThis is the basis for the collection's predicted returns for the fund next year – just into 'double-digits' - which is imposing if it comes to fruition considering the majority of UK property money have fallen into low single-digits over the past year, even making losses in some casesHarvey-Jones supposed: 'Long term there will be a fall in growth, but not in prices; over the next year, prices will go back to the enlargement trend of 7% per annum, even though they have taken a large hit so far this year since August

'He denied this prediction will affect the fame of the fund as it allows investors to move between its three dissimilar sub-funds, which each take dissimilar bets on whether prices will rise or fallFor example, you could originally gamble that house prices will fall next year, but alter your mind at a afterward date and move your investment into the sub-fund that bets on the likelihood that prices will riseThis moving of funds takes two weeks to total however, the maximum time most money can take to carry out such a transactionThe fund is not being marketed at investors hoping to make a rapid buck however, but those with significant money invested in property who are looking to reduce the risk of their overall collection

Mick Gilligan, head of research for brokering house Killick & Co, said: 'It's huge that something like this is taking benefit of the derivatives market in London, which is one of the most advanced in the world but perhaps under-utilised in the case of the residential property market It's another tool you can employ to balance your portfolio'He suggests another option would be to unlock an account with a increase betting firm, but for this you would need some knowledge of spread gambling, which can be riskyThe advantage of investing in a professional asset vehicle is that your money is invested on your behalf by an benefit management house, although you do have to pay an annual organization fee, typically 1%-1

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