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Spread Betting On House Prices

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I just opened an IG index account, largely to see what they were forecasting for future seasonally adjusted Halifax indices. March 08 is currently at Sell 193.9 Buy 196.9. Am I right in thinking that this means that the market would have to go down by at least 1.4% for me to gain, and any loss less than that would incur a loss for me? Seems a bit of a large spread for such a sticky market.

Has anyone tried this?

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When I looked my opinion was that the spreads were so large there was no point betting unless I was doing it for fun.

I think the spreads used to be even wider than that though.

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agreed spreads used to be wider. those spreads look low for property which surprises me since i always thought ig were cra p.

what is march 09 priced at?

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agreed spreads used to be wider. those spreads look low for property which surprises me since i always thought ig were cra p.

what is march 09 priced at?

Looks like Jun 08 is the last you can buy at 187.6 191.2

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Try spreadfair.com - generally tighter spreads and more maturities. Dec 2010 is currently trading at £173,000 - £177,000 (at least a 10% fall from today's prices). I've been watching these quotes for a while now as an unbiased estimate of future prices. It'll be interesting to see how the market moves as recession begins to kick in.

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its a long time to lock up capital for. theres no margin trading i dont think with these exchanges - not with betfair at least

and not should there be given the forum we're on and time we're in!! :P

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I just opened an IG index account, largely to see what they were forecasting for future seasonally adjusted Halifax indices. March 08 is currently at Sell 193.9 Buy 196.9. Am I right in thinking that this means that the market would have to go down by at least 1.4% for me to gain, and any loss less than that would incur a loss for me? Seems a bit of a large spread for such a sticky market.

Has anyone tried this?

I think you'll find it is worse than that. There is a "guaranteed stop" premium of 1.3 to add to the 3.0 spread. So you would need to cover a movement of £4300 just to break even. That's quite a large chunk for the privelege of being correct unless the Halifax index tanks.

I've had a look at these house price spreads before and found it pretty hard going to see the profit.

Edit: It says the nearest "stop" you can place is 12 points away from the opening price which indicates you can use margin on it. (but I'd have a look through their documentation to check that out to be on the safe side.)

Edited by Red Kharma

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I think you'll find it is worse than that. There is a "guaranteed stop" premium of 1.3 to add to the 3.0 spread. So you would need to cover a movement of £4300 just to break even.

Why would you want to use a stop or a guaranteed stop? It's not exactly a volatile market.

I still agree the margin is too wide to be any use though.

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Why would you want to use a stop or a guaranteed stop? It's not exactly a volatile market.

I still agree the margin is too wide to be any use though.

If you don't then use one then I guess you'd need to have the total contract value available in your bank account in case of a margin call? I use them to keep the balance on my trading account as low as possible as much as for "protection". So if you were talking actual house price figures that's considerable. If it was a relatively small punt then I guess it wouldn't be an issue. Do you trade without stops or with full value of the trade on deposit with them?

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ive never traded house price futures due to large spreads

but in mid 06 i went long house builders on the view the housing market was running crazy (and shorted short-sterling, betting rates would rise)

so you could sell short uk homebuilders/banks instead

only problem this is a tired trade now... i normally hedge trades by selling banks.homebuilders, long the rest of the market, but most people are underweight financials now

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Spreadfair futures, particularly London-specific, seem to be falling again after a short bounce - now at £265.5k for Dec '10 (from an actual 300k in Dec 07, and a predicted 303 in March 08). I'm watching these as at the appropriate time (probably shortly after the first big falls) I intend to go Long as a hedge at about 10% the value of a property.

Anyone know what the IGIndex numbers currently look like?

Edited by jdc

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  • 293 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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