Buyer drops offer by £27k

beer_tins

Rssr wrote: »

Here's a piece on UK property derivatives. OK it's a sponsored statement, but it's still quite interesting:

http://db.riskwaters.com/data/risknet/pdf/2007/124-125_Risk_0907.pdf

Thanks, an interesting read. As they said themselves, one of the problems is that "the underlying asset is, by its very nature, sticky and illiquid". They also touch on the fact that people want to hedge against the value of their own home, rather than an index of national house prices. They didn't seem to give much weight to this, but I think it is significant (as stated in previous posts).

It does seem to be a good way to invest in property (even in it's fall if you short) without having to buy the illiquid, hard to shift underlying asset. This might make it more popular with investors and speculators rather than owners wishing to hedge IMO.

Cranston_2

Figures from IG Index spread betting (time 13:21 -23 July 2008).

Halifax UK House Price Index derivatives contract

June 2008 settlement price = 180.3 (in £,1000)

September 2008: 165.8-169.00
December 2008: 157.1-160.7

They say that the contracts: "settles basis the HBOS monthly seasonally adjusted Standardised Average House Price survey".

So the market is not on a specific house type but the Halifax Index and YES that market is expecting further declines in price (11% from the June 2008 level by Christmas 2008).

snoopy78

chucky wrote: »

Snnopy - just to show your ignorance... and how your life revolves around this forum...

Stop Googling and using Wikipedia as your bible
http://en.wikipedia.org/wiki/Property_derivatives

Total Return Swap - http://www.financial-edu.com/total-return-swap-trs.php

A Forward can be for any product that you like. For property very, very rare unless they are based on an Index which is whole new subject which you probably won't understand.

As for Property Index Notes why don't you try Google again as it's obviously you've used Copy and Paste to get your info...

As for a Property Derivative Market tell me where the exchange is or what mechanism they use to trade.

I'm here all week by the way waiting for that answer...

Actually did not get it from google got it from a economics text book (old uni book) I was looking at, I think the person who wrote the Wiki page used the same book but reworded a few things. But you're right I did not know it off the top of my head as I only know information regarding fuel and forex, hedging.

But it was totally obvious to anyone who knows about hedging that if there is a price fluctuation risk in a certain asset then there will be hedging tools, and thus derivatives for said asset.

Your whole point here seems to be "ooh look someone did a little research before shooting his mounth off" if only you'd have done the same before telling everyone that there is no such thing as "and which property derivatives market is this!?!? please tell..."

snoopy78

chucky wrote: »

again have another go at shooting your mouth off... tell me where the exchange is or what mechanism they use to trade?

and before anyone gets excited, the IG Index spread betting isn't a Derivatives Market.

The following posts have answered the question because there isn't a physical derivatives market

What are you talking about:-

Do property derivatives exist? -> Yes
Are they traded? -> Yes
Therefore do a property derivative market exist? -> Yes, simple as that.

Not sure of the specific mechanism but it does not change the fact that they exist. Like many others derivative markets that I am not sure of specifics as I don't work with them.

snoopy78

chucky wrote: »

but i love the fact that a previous post stated the comment about THE Property Derivative Market was in reverse as if one existed - what a clown!!!

There other day you were calling someone a clown for saying a property Derivative market exists now you're telling me you work in the property derivative market.

snoopy78

chucky wrote: »

If they hedge against these in any way that is another story, this is not a derivative. From a financial interpretation this is not a Derivative transaction.

What do you mean by this, when you hedge one option open to you is are derivatives. So if you hedge using derivatives then this is called a derivative transaction, if you use derivatives to hedge then you need to record the derivative transactions separately on you reporting accounts in accordance to IFRS 36 (may have No. wrong). So what part of this is not a derivative transaction from a financial interpretation?

kingkano

You guys should just get a room already!!!

snoopy78

chucky wrote: »

and what has accounting and reporting got to do with derivatives!?!?

let's take this back a few steps so that you understand...

you've mentioned a Total Return Swap (I can only assume you know what they are if you mentioned it in your post)... Take a 100% Interest Only Mortgage, this has exactly the same logic as a Total Return Swap.

Before anyone asks; a TRS has more components Dirty Price, Bond Rating etc...

Are you now going to tell me that an Interest Only Mortgage is a Derivative!?!?

Snoopy please stop trying to pretend that you about things - enough is enough!!

Behave yourself now!!

A TRS in the property market is measured using some index relating to the property market, and in exchange for an interest rate like LIBOR or fixed (as I said not sure on specifics and they probably wide varieties).

A derivative is defined as a financial instrument which changes in value is related to some underlying asset.

So the asset in question is property as the index will change as property prices change and therefore a property TRS is a derivative. Nothing you have said has made me think otherwise, but if I'm wrong educate me!

The reason why reporting standards are very important is due to the fact that they define what is and is not a derivative. As you need common definitions throughout the world.

Dithering_Dad

Yawn, do we have a winner in the 'King of the forums' competition yet?

I came back here to see if the OP had accepted the reduced offer and the 'derivatives' argument is still in full sway. Ho hum.

snoopy78

Dithering_Dad wrote: »

Yawn, do we have a winner in the 'King of the forums' competition yet?

I came back here to see if the OP had accepted the reduced offer and the 'derivatives' argument is still in full sway. Ho hum.

My aim was to get a who new forum thread :-

Pure Money > House Buying, Renting & Selling > House Prices > Derivatives.

It was how the House Prices forum was born as all the other house buying, renting & selling users got fed up with us agruing.