Sunday, Nov 25, 2007
I'll take that bet ....
FT: City bets on 7% fall in house prices
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. These future housing contracts, which were published for the first time this year and have seen a surge in trading volumes in the past few months, are predicting much bigger falls in property values than other non-tradeable forecasts.
Posted by uncle chris @ 09:05 PM (1418 views) Add Comment
17 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. confused76 said...
"The futures contracts predict the average house price in the UK will fall from £197,817 to £183,970 in a year’s time. The contracts predict prices will remain stable around this level for the next five years before they start rising again."
That means average house price realigned to 3.5x average salary by 2013?... oops then the average salary should be £52,563. I do not believe so
I predict average price to fall to 150000 in two years then flat for 3 years
so average salary 42857 in 2013, house price 150,000... more or less
WOW WOW WOW WOW
what a pain in the BTLer a@@es
2. the northerner living in oz said...
1. confused76 said...
"The futures contracts predict the average house price in the UK will fall from £197,817 to £183,970 in a year’s time. The contracts predict prices will remain stable around this level for the next five years before they start rising again."
It is possible that average wages reach 52K in 2013
If the government totally give up controlling the economy and we get hyperinflation.
By then the pound will be worth very little compared to other currencies
3. stillthinking said...
Seems it is all coming true. Considering London alone, for a 200K flat which isn't a very nice property, bad area and small etc, why would anyone buy at all, because the 14K drop a year is more than the rent. You don't even need to consider the situation on alternative returns.
Maybe a new key indicator is not whether the rental return on a property beats a deposit in the bank, but instead,
how the price drop per year compares with the years rental.I am looking for a flat again and the prices haven't changed since 2001, except that the flats are bigger. I suppose there are more expenses associated with renting now but basically nothing changed since then.
I looked at the houses for sale in my local estate agents today. Still marked up at 450K (small two up, two down, dangerous area) and more, and I thought apart from the bubble and financial concerns, which country are we in? You have to laugh because they are absurd. I know some people who are doing well, really quite well in salary terms (dirty hard working soulless swots) and they couldn't even talk to the estate agent about buying. If anybody actually had that money as their own instead of borrowing it, there is no way that they would purchase an unpleasant small 1960s family house in London. No way, for that money you could live the life of a king abroad.
I do think that in the beginning that both sellers and buyers will stop playing the game. Sellers will rent from necessity, and buyers will rent from choice and waiting. Perhaps this time will be big enough to affect social memory and change the game.
Maybe even the dire predictions of this site will fall short of the mark.
4. planning4acrash said...
No way 76, prices are going down, down to somewhere between 90 and 110k within the next 5yrs. 3.5x 30k (average wage of FTB? Is 105k). I say 90k because that would be an overshoot of the 3.5x. No doubt isolated locations will fall much further. Down to 140k in two years. The rest over the following three/four years. Plateau for the next couple of years then bull market again. Only thing is, could be a harder fall if we have the great depression that everybody is on about. In that case the 90k would be worth 40k in worldwide purchasing power as the pound plummets by half.
I'm the bear of the bears m8!
5. drewster said...
Futures markets are a good way of predicting likely prices, but that doesn't mean they're always right. As the credit crunch hits more, I'd expect falls of greater than 7% over the next 12 months. Interesting quote from the article: "The derivatives contracts are also pricing much bigger falls next year than they were a month ago, when they were predicting a 2 per cent decline." - So basically admitting that the traders have changed their minds quite substantially in just one month. Don't be fooled, these traders are no more "experts" than you or I.
6. the northerner living in oz said...
There has probably been a complete spread of futures contracts sold
From 0% fall right through to Long shot 30% fall it is just that the current favourite is
7% fall.
In this respect futures contracts are little different than horse betting
as we get closer to the event the favorite will change.
7. Notbuying said...
Mmmm, so we're to believe the forecasts of a group of so-called expert speculators?
Is that not what got us into the mess we are in now in the first place?
Personally, I've seen prices in Bradford on Avon drop by 20% already this year and show no signs of stopping.
Check out propertsnake (.co.uk) if you're in any doubt.
Or just bury your pretty little vacant I believe everything Sarah Beeny tells me head in the sand
8. dohousescrashinthewoods said...
I think people are waking up to it. The fact that traders are willing to stake money on a fall reflects what they really think. I suspect the size of the average fall predicted by the average bet will gradually increase.
9. Will said...
I never understand why some people have this obsession with average salary. Surely the important indicator is average household salary?
I don't know what it is, but clearly it is more than average salary, whilst also being a far better indicator of how affordable a property is to the buyer. To blindly make predictions on a single salary is ridiculous, although clearly either way a reduction is needed.
10. Orwell said...
Assuming that it is 7% on average then that means that some areas will fall even more. We have already seen falls of 40% in new builds in Manchester and Leeds etc. So is that in the other areas? What of the South West which is vastly overpriced?
11. Davros said...
Sounds about right doesn't it?
12. confused76 said...
I stand by my forecast
average salary 42857 in 2013, house price 150,000
I take bets, of course
13. little professor said...
November October
On Mo On Yr On Mo On Yr
Nationwide N/A N/A +1.1% +9.7%
Halifax N/A N/A -0.5% +8.9%
Rightmove -0.7% +7.9% +2.7% +10.4%
Hometrack -0.2% +3.6% -0.1% +4.4%
Hometrack has always been the msot pessimistic
14. little professor said...
15. denzil said...
That aligns reasonably nicely with my prediction of 10%. Unless economic conditions worsen significantly I would not expect a helluva lot more than 10%
16. This comment has been removed as it was found to be in breach of our Blog Policies.
17. This comment has been removed as it was found to be in breach of our Blog Policies.