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Tradition Future Hpi, Jul/09

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Tradition Future HPI, UK residential property forward trading

Jul/09

HPI (NSA) 158,807 (to date)

1 year 149,676

3 year 142,926

5 year 150,867

Chart Tradition Future HPI and Halifax SA, Jul/09

ddzsg.png

Link to reports

http://www.sprefs.com/index.php?page_id=169

This was always the danger of using VI indices as a hedge against the drops. It is hardly surprising they are being used to boy the market rather than hammer it down. I always held they view they would do what they have done and the chances of receiving the full fall from spread betting on these indices were slim to none which I why I steer clear of them.

If there was a non corrupt index that these futures were based on I would have had a punt in 07 sadely even the land registry is fiddled with.

Edited by Confounded

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This was always the danger of using VI indices as a hedge against the drops. It is hardly surprising they are being used to boy the market rather than hammer it down. I always held they view they would do what they have done and the chances of receiving the full fall from spread betting on these indices were slim to none which I why I steer clear of them.

If there was a none corrupt index that these futures were based on I would have had a punt in 07 sadely even the land registry is fiddled with.

?

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This was always the danger of using VI indices as a hedge against the drops. It is hardly surprising they are being used to boy the market rather than hammer it down. I always held they view they would do what they have done and the chances of receiving the full fall from spread betting on these indices were slim to none which I why I steer clear of them.

If there was a none corrupt index that these futures were based on I would have had a punt in 07 sadely even the land registry is fiddled with.

This is the only place where you put your money where your mouth is.

The expectation from them is clear - market will stay more or less flat at around Feb 2009 levels from now on for the next 5 years.

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Bloody hell today is going a bit bullish, is the sentiment starting to change from Uber bear to cub?

All the economic foundations point at further falls, here’s hoping for another 20-25% down, indeed we are merely trading water to the next elections when higher taxes, state cuts etc will kick in but as someone has said this is evidence from a market where ‘you put your money where your mouth is’.

The important thing is the level of transactions which are still down (June 08vs09) from 59k to 30k. Although this dry up of supply appears to be knocking prices upwards again.

Maybe the HPC is also just in a limbo, pre election state as well but I am taking a battering at home from her indoors to buy…….

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Bloody hell today is going a bit bullish, is the sentiment starting to change from Uber bear to cub?

All the economic foundations point at further falls, here’s hoping for another 20-25% down, indeed we are merely trading water to the next elections when higher taxes, state cuts etc will kick in but as someone has said this is evidence from a market where ‘you put your money where your mouth is’.

The important thing is the level of transactions which are still down (June 08vs09) from 59k to 30k. Although this dry up of supply appears to be knocking prices upwards again.

Maybe the HPC is also just in a limbo, pre election state as well but I am taking a battering at home from her indoors to buy…….

Everyone's situation is different but If you did not have a reason to buy in 2007 and 2008, there is no reason to buy now - nothing has changed for better

Have houses become cheaper? Have rents gone up? Have salaries doubled?

I can buy a house I live in on a standard 25 years repayment mortgage for a monthly payment of £2,500

I can buy same house on interest only mortgage for £1,840 a month

But what an idiot would I be buying as above when I can stick to renting it for £850 a months

Do you see the dislocation? It was there before they started throwing money at it and it is still there

BTW - my job may not be there by the end of this year if the 3d wave of redundancies hits as expected

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Everyone's situation is different but If you did not have a reason to buy in 2007 and 2008, there is no reason to buy now - nothing has changed for better

Have houses become cheaper? Have rents gone up? Have salaries doubled?

I can buy a house I live in on a standard 25 years repayment mortgage for a monthly payment of £2,500

I can buy same house on interest only mortgage for £1,840 a month

But what an idiot would I be buying as above when I can stick to renting it for £850 a months

Do you see the dislocation? It was there before they started throwing money at it and it is still there

BTW - my job may not be there by the end of this year if the 3d wave of redundancies hits as expected

I know, I work at an ad agency who specialise in retail so equally have my **** exposed. I have heard about this third leg of economic crash (via a friend who was speaking with the FD of BP), although I do not know what will kick it off…..derivtives, high oil costs….?

True, there is no juice left in the tank for HPI to take prices anywhere but down in the long run.

True also that renting, especially with the Rent It Out instead brigade flooding the market is getting cheaper. Am sorting out an 18month agreement (already been there 14 months) negotiating down from £785 to £700.

Should remind myself that the number of berks putting in STC offers (Harrogate is awash with them) on places does not mean that one should join the queue of lemmings after all these folk would have said in 07 that houses only ever go up in value.

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?

My understanding was the futures are based on the future of Halifax data. So in order for your bet to pay up you had to predict where Halifax average house would be at your chosen point in time.

My stance, as it was before the crash began, was that the VI indices would not be allowed to reflect the true level of decline. For a multitude of reasons but the main ones being.

1. Consumer sentiment/housing sentiment clearly tied to it and why kick yourself when you are down.

2. I believe (may be wrong) these indices are used by the banks to calculate write downs, any improvement of which would improve the banking sectors position.

These indices have become disproportionately important and are critical to the UK economy so I always had my view they would not reflect the true fall in house prices. I believe they were used earlier this year to sow the seeds (through manipulation) for what has now become a bounce with its own momentum. The housing market is extremely sentiment driven, it left fundamentals a long while ago so by sowing the seeds of a turnaround earlier this year it actually resulted in fruits later on as seen recently.

I know this is not a scenario that you will buy into but I thought I would flesh out my previous post.

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My understanding was the futures are based on the future of Halifax data. So in order for your bet to pay up you had to predict where Halifax average house would be at your chosen point in time.

My stance, as it was before the crash began, was that the VI indices would not be allowed to reflect the true level of decline. For a multitude of reasons but the main ones being.

1. Consumer sentiment/housing sentiment clearly tied to it and why kick yourself when you are down.

2. I believe (may be wrong) these indices are used by the banks to calculate write downs, any improvement of which would improve the banking sectors position.

These indices have become disproportionately important and are critical to the UK economy so I always had my view they would not reflect the true fall in house prices. I believe they were used earlier this year to sow the seeds (through manipulation) for what has now become a bounce with its own momentum. The housing market is extremely sentiment driven, it left fundamentals a long while ago so by sowing the seeds of a turnaround earlier this year it actually resulted in fruits later on as seen recently.

I know this is not a scenario that you will buy into but I thought I would flesh out my previous post.

"My understanding was the futures are based on the future of Halifax data"

Correct. I thought you were suggesting that the futures index was corrupt, but instead you are suggesting the underlying is dodgy. TBH I've not seen housing fall more than the index (~25% in the South East), so cannot share your cynicism!

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