A HOUSING downturn is not all bad news: homeowners and investors have several ways to profit. We show you how:

Sell to rent

Estate agents in many areas are reporting an increase in the number of people selling now to lock in profits while demand is still strong. They then plan to rent in the hope of buying back into the market in six or 12 months at a lower price.

For this to work, you need to earn more from putting your profits in a savings account than you would from property growth. The best accounts pay more than 6%, while forecasts for property next year range from a fall of 3% to a 4.5% rise.

Go for a variable rate mortgage

Many economists believe the next interest-rate move will be down, possibly next month, so anyone with a variable-rate mortgage should see payments fall. But make sure you go for a tracker rather than a discount, because they are linked to Bank rate. If you opt for a discount, linked to the bank’s standard variable rate, any rate change is at the lender’s discretion.

Bet on falling shares

Housebuilders tend to lag the market by an average of 11% in periods when house-price inflation is falling, while leisure stocks underperform by 13% and retailers by 5% as consumers tighten their belts.

Graham Secker, analyst at Morgan Stanley, said stocks to avoid include Laura Ashley, Bellway and Travis Perkins.

You can profit from falling prices by placing a spread bet with firms such as IG Index.

Don’t necessarily avoid banks

Bank share prices have been hammered recently, but Secker said they historically beat the market by an average of 13% when house-price inflation falls. So now could be the time to snap them up, but avoid vulnerable mortgage banks such as Bradford & Bingley and Alliance & Leicester.

Bet on falling house prices

IG Index lets you speculate on falling prices. Suppose the average UK house price is £199,000. IG’s spread for three months’ time might be 199.9 to 203.1. If you think prices will fall, you could bet £1,000 for every point below 199.9. In three months, if the spread is 195.5 to 196.5, you make £3,400 (3.4 times £1,000).