Monday, Nov 26, 2007
House Prices to fall 7% next year
FT: City bets on 7% fall in house prices
This sounds more realistic than the headlines predicting a 0% change. When in history has a bubble ever been followed by a plateau? "The City is betting on UK house prices falling by 7 per cent next year in new tradeable derivatives contracts, which some bankers say is the best indicator of the market’s direction as millions of pounds are riding on the outcome."
Posted by happyrenterz @ 11:03 AM (456 views) Add Comment
2 Comments
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1. monty032 said...
Does anybody have more details on these futures contracts? I already trade options through ODL. I looked some months ago for house price options or CFD contracts but couldn't find any.
For those of us prepared to put our money where our beliefs are, how about a T-shirt (or a badge if you want to be less conspicuous) available through this web site, saying "I'm short your house"?
2. Jonb said...
You can do a spread bet on some of the house price indices. However, if prices only fell by 6% in the period, you would end up losing money, even if they fell by a lot more than that afterwards.
Usually, in the run up to a house price crash, there is a period when sellers hold out for pre-crash prices and buyers hold out waiting for the crash to happen. This is where we are at the moment. For a while, the only trades are people swapping one house for another, where any gain on one side is an equivalent loss on the other.
It is difficult to guess exactly how long the current phase will last before the real crash takes hold. I think we are about 2 months into a 3-6 period. HIPs could delay things a bit, and CGT changes could delay it a bit more, and a very large (but unlikely) drop in interest rates could delay things still further, but I can't see it surviving past 2008.