In a market bereft of buyers prices must fall and with fewer people able to ?gear up? to pay the current prices then I fear this will be the scenario towards which we are heading. A major problem is that once a trend gets set it is very difficult to halt its momentum (witness the property situation in the US). Buyers shrink from putting themselves in hock when they fear that next week / month / year the house they have, so painfully paid for, will have dropped in value. And so stagnation follows. If the housing market locks up then many retailers who thrive on sales to new-owners will also fail and so on down a long line that ends with a long recession. Earlier this year growth was just enough to keep the tills turning over but without some aid from our central bank I fear that this will not be the case for long.

If that is the general trend then one option to try to beat the fall is to bet that House Prices will fall. Some of the spread betting companies like IG Index now offer markets on the Average UK House Price and the Average London House Price.

Caution is always advised with any such investment. For a second opinion I asked Simon Denham of rival spread betting firm, FinancialSpreads.com, for his view on the market, ?Unfortunately since the mid 90s the UK laws on bankruptcy have been lightened considerably and all in favour of the bankrupted. In the US, banks have been very used to people just handing their keys in and walking away. In the UK this would have affected your credit rating, virtually, for the rest of your life. Now, however, the social stigma and financial implications are negligible so banks may find far more properties handed back than in previous slowdowns especially in the huge numbers of flats sold to younger buyers over the past five years or so. It is expected that this area will be the heaviest hit in any price reversals and it is just this area where the buyers are most able to just ?move out? and ?move home?.?

Spread betting offers an interesting hedge for home owners in that you can bet on house prices to fall to help offset any fall in the value of your home. However it should be noted spread betting carries a high level of risk and may not be suitable for all classes of investor. Only trade with money that you can afford to lose. Make sure you fully understand the risks involved. If necessary, seek independent financial advice.