Housing market in the UK today offers a variety of investment bets to gain from. Choosing a portfolio is your call though. A property portfolio comprising mainly of buy to let properties does not seem so appealing considering the fact that yields are flattening and capital appreciation has slowed down, but there are still umpteen ways of making money from the housing market of UK. Commercial property funds, spread betting against a house price index or participating in floats could help out in reducing volatility or even act as a hedge. According to analysts investors in commercial property funds are now stronger than ever than those contemplating buy-to-let, a sector where the returns have not held much promise over the past one year. Most decent commercial property funds will be invested in high quality office and retail space with long term leases of 10-15 years compared to a six month or a one year lease as a buy-to-let landlord. Even though residential and commercial properties prices and rental yields have little correlation but at the same time it is important for property investors to try and ensure a balance between the two. While the optimists point out a soft landing for the UK housing market in the current year, there are concerns of negative impact on housing market due to high levels of consumer debt. On the other hand those taking pessimists view would bet down low, beneath the spread. There is scope to make up for any fall in the capital value of your property or the value of the homebuilder shares, by the profit made by an investor on the spread bet. But the investors should bear in mind that as the spread bet is based on average house prices it is not always a perfect hedge. Expert opinion: While the property market was perhaps seen as a difficult call to make and speculate, from a historical point of view it has been more predictable than the index at FTSE. New comers should research a lot before entering any of the property funds and choose a property portfolio having a combination of both commercial as well as residential properties. |
