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mattn

Spread-betting Prices Suggest 23% Fall In 2008!

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Not sure if I'm getting the wrong end of the stick here, but if you head to spreadfair.com and look at the q4 2008 house price figures it suggests expectations amongst the spread community are for around a 23% drop in house values in 2008!

This spread is based on the Halifax quarterly index, and works so that should you want to bet on prices going down, you sell now, and either buy back later at a lower price or wait for the contract to mature lower than your original selling price. Other than a really small (£20) sell at 162 anyone wanting to bet on house price falls would need to sell at 156. Given that the Dec 2007 price was around £200k (so 200 on spreadfair), that's a drop of 23% !!!!

Now I know the spread is really wide, but these are huge numbers, especially when you consider that there has only been one year in the UK when house prices have dropped by more than 10% - and that was during the great depression of the 1930's and only a drop of around 12% (I think). During the last great crash of the nineties, the total drop over 4 years was only 14%. Now were talking over 20% in one year!

I know these are only expectations, but they will be self-fulfilling ones eventually. So, the only question is what, having done it's job, happens to housepricecrash.co.uk........

mn

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Not sure if I'm getting the wrong end of the stick here, but if you head to spreadfair.com and look at the q4 2008 house price figures it suggests expectations amongst the spread community are for around a 23% drop in house values in 2008!

This spread is based on the Halifax quarterly index, and works so that should you want to bet on prices going down, you sell now, and either buy back later at a lower price or wait for the contract to mature lower than your original selling price. Other than a really small (£20) sell at 162 anyone wanting to bet on house price falls would need to sell at 156. Given that the Dec 2007 price was around £200k (so 200 on spreadfair), that's a drop of 23% !!!!

Now I know the spread is really wide, but these are huge numbers, especially when you consider that there has only been one year in the UK when house prices have dropped by more than 10% - and that was during the great depression of the 1930's and only a drop of around 12% (I think). During the last great crash of the nineties, the total drop over 4 years was only 14%. Now were talking over 20% in one year!

I know these are only expectations, but they will be self-fulfilling ones eventually. So, the only question is what, having done it's job, happens to housepricecrash.co.uk........

mn

Sorry for the poor maths, it's actually 22%!

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People on spreadfair are more doomish than us.

I looked at this before, as there's a point where I'd consider a hedge, but the volumes and spreadfair's margin didn't seem so good.

In an ideal world, you could buy Dec2010 at 100k (it wasn't too far off this a while back, but can't check today) for 100k.

Then whatever the price average price in Dec2010, you'd be able to buy it with the 100k you put down now?

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Havent a clue how these outfits operate, but, as a scientist/engineer: What is their range, confidence intervals or whatever.

Seems absurdly low to me (35%?).....

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The problem with Spreadfair is that they dont have any big players, so the volumes are too low to make a well priced market

They tightened up on their credit terms last February and lost nearly all their big players ...

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Havent a clue how these outfits operate, but, as a scientist/engineer: What is their range, confidence intervals or whatever.

Seems absurdly low to me (35%?).....

It's an exchange, so it allows people to bet with each other on their expectation of prices, rather than being any sort of prediction. And if you wanted to bet on the level of house prices end dec 2008 (in a negative way) you'd have to do so pricing in a drop of 22%....

HTH

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The problem with Spreadfair is that they dont have any big players, so the volumes are too low to make a well priced market

Yes and the same is happening with property now the sales volumes have fallen of a clif.

Not much is selling at auctions and to be fair the prices are not to bad on some where the vendor has a low reserve price.

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that is impossible

I really don't think that spreadfair is pricing in the potential for house price falls. Over the last 6 months house prices have been falling by an average of 2% per month. Things are far worse now than they were 6 months ago, so we may well move to a situation of 3 or even 4% a month. Factoring that in, it looks like the index could be down to 100 by the end of next year!!!

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  • 399 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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