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Investors bet on 30% falls by 2011
carolt
Posts: 8,531 Forumite
http://www.ft.com/cms/s/0/a24ab0be-61a9-11dd-af94-000077b07658.html?nclick_check=1
House prices are expected to fall by almost 30 per cent during the next three years according to the leading indices of property price futures, with more investors than ever looking to bet on long-term property prices as the value of their own homes fall.
About £50,000 ($98,752) will be wiped off the value of the UK average house price of £185,000 by 2011 judging by current trading on spread betting platforms, more than most commentators currently expect.
Residential price derivatives, which are commonly used by institutional investors, are also implying a fall of between 25 per cent and 30 per cent, according to Philip Ljubic, director of property derivatives at ABN Amro.
......
Tradition, an interdealer broker, meanwhile says that the average UK house price is expected to fall to £153,591 next year and to £137,233 in the next three years, and only begin its recovery in 2011.
The problem in the residential derivatives market, according to traders, is that sentiment is so bad that there are almost only those who want to sell the market short.
Tellingly, the market has very few buyers of long residential derivatives.
.......
House prices are expected to fall by almost 30 per cent during the next three years according to the leading indices of property price futures, with more investors than ever looking to bet on long-term property prices as the value of their own homes fall.
About £50,000 ($98,752) will be wiped off the value of the UK average house price of £185,000 by 2011 judging by current trading on spread betting platforms, more than most commentators currently expect.
Residential price derivatives, which are commonly used by institutional investors, are also implying a fall of between 25 per cent and 30 per cent, according to Philip Ljubic, director of property derivatives at ABN Amro.
......
Tradition, an interdealer broker, meanwhile says that the average UK house price is expected to fall to £153,591 next year and to £137,233 in the next three years, and only begin its recovery in 2011.
The problem in the residential derivatives market, according to traders, is that sentiment is so bad that there are almost only those who want to sell the market short.
Tellingly, the market has very few buyers of long residential derivatives.
.......
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Comments
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Wouldn`t surprise me one bit.0
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The problem in the residential derivatives market, according to traders, is that sentiment is so bad that there are almost only those who want to sell the market short.
Tellingly, the market has very few buyers of long residential derivatives.
.......
That's because institutions are generally hedging a physical long position. It's quite unusual to be physically short property and hence the need to hedge by going long paper is low.0 -
Quite possibly. The article did state however, that:
"Cantor Spreadfair, which tracks national and London house prices to the end of 2011, says the market has never been more popular.
...
The number of transactions has more than doubled compared with this time last year, he added. About 40 per cent of all new clients to Spreadfair trade on house prices."
which suggests that the situation is unusual.0 -
Exactly, people see prices falling and are looking to hedge their long physical length.0
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That sounds rude! Can you explain, please?0
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Essentially I would expect there to be more sellers than buyers on these derivatives markets as people look to lock in the value real property that they own to protect against falls. The only people buying will be those speculating that the market is oversold.
My suspicion is that the falls predicted by these markets may be overcooked for this reason.
The standard response to my assertion would be 'put your money where your mouth is!'
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Oh and always worth considering that futures markets are notoriously poor predictors of the future.0
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As i said Yesterday we can all speculate about property prices on a Forum like this... but how many would put hard cash on there predictions ?? People Spread betting such as this evidently are !! ... Read into that what you will .0
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As i said Yesterday we can all speculate about property prices on a Forum like this... but how many would put hard cash on there predictions ?? People Spread betting such as this evidently are !! ... Read into that what you will .
Maybe they MEWed it
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Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0
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