subject: Finance and Trading the Housing Markets [print this page] Finance and Trading the Housing Markets Finance and Trading the Housing Markets
It's interesting to see that you can now speculate on house prices with some of the larger spread betting companies. However, should you wish to bet on house prices, you may be asking yourself, where next for the housing markets?
According to a recent Financial Spreads report, the latest UK data has shown that house prices have fallen to their lowest level for eight months. "It's not a surprise that prices are decreasing if buyers cannot get the mortgages they could over three years ago. In 2007, a buy-to-let investor could pick up flats and houses with a 10% deposit. Now the buyer will need something closer to the 30-40% mark," it read.
"This means that either house prices need to fall in order to make them more affordable, or mortgage lenders will need to be more flexible. With the latter looking unlikely, the former will probably continue."
If you're interested in speculating on the UK housing markets, or perhaps looking for a hedge against rising or falling house prices, you can trade with IG Index. Of course, as with all investments, such as trading shares, funds, pensions, housing etc, you can lose money. With spread betting you can lose more than your initial investment.
So why choose spread betting? Spread betting can be beneficial on a number of fronts including easy access to the international financial markets and certain tax based advantages.
Spread betting is free of tax*. You are not buying or selling any assets, rights or stocks; you are merely speculating on the future price of a financial market. There's no capital gains tax, no stamp duty and no income tax.
Secondly, a key advantage is that spread betting offers a wide variety of markets on which you can speculate. As mentioned, you can speculate on the housing market, but you can also spread bet on the commodities, indices, foreign exchange and equities markets.
Also, an investor can either go long or short with a spread bet. This means you can speculate on markets to either rise or fall. If you think house prices will rise you can speculate on that, however you can also bet on house prices to fall.
Another key benefit is the lack of fees: when you trade stocks and shares you normally incur brokers' fees and/or commission charges. With spread betting there are no such fees.
As discussed, investing does have its risks. Nevertheless, there are things you can do in order to reduce the potential drawbacks. Adding a guaranteed stop loss order' to your spread bet helps to reduce your risks. If you start to lose on a trade, and the market reaches your pre-determined stop loss level, then your order will close the trade and you won't lose any more capital.
*According to current UK and Irish tax law. If you pay tax in another jurisdiction then tax law may vary.
