Investing in the Housing Market

With house prices falling for the ninth month in a row and prices forecast to fall 10% next year, investing in the housing market may not seem like a good idea. However, there are still some good reasons to invest in the housing market.

1. Falling house prices may offer some bargains in the coming months.
2. Long Term Prospects for House prices in the UK could well defy some of the gloomy predictions. Consider the predictions for rising number of households; it is highly unlikely the supply of housing will  continue to meet the demand for housing. It is these supply and demand side factors which will ultimately determine prices. (see long term prospects for housing prices)
3. Mortgage Woes won’t last forever. Alot of the current problems in the housing market is due to the credit crisis and the fact that banks have been withdrawing many mortgage products. It is this lack of available mortgages which are diminishing the number of new buyers. In due course, the worst problems of the mortgage industry should ease, enabling the housing market to recover some ground.
4. Opportunity for developing neglected housing. Whatever is happening to house prices, there is always the option for buying neglected housing, doing them up and selling them on. This can work well for the DIY enthusiast and needs careful planning. Some expensive projects like building a conservatory may cost you a lot of money, and only increase the house by a similar amount. However, other strategies such as cleaning up a house, inserting a new kitchen and bathroom can make a much bigger difference.
5. Buy To Let Market. The only alternative to buying is renting. If people can’t get a mortgage to buy, they will generally be forced into the renting sector. The demand for somewhere to live doesn’t fall just because of a credit crisis. The mortgage slump is providing a bonus for buy to let landlords as renting yields are strong in the face of rising demand from this sector.