Prices to fall as "irrational" rally ends

chucky

Generali wrote: »

Something is going to have to give in the UK housing market at some point. Sales can't remain at the current depressed levels indefinitely as ultimately people will need to sell to move jobs, have kids and release equity so they can retire as well as the forced sales of probate and repossession

this has been said since 1999

chucky

kennyboy66 wrote: »

http://www.tfsbrokers.com/pdf/RISK&MANAGE/2009/Sep-09.pdf

I've no idea what kind of volumes this compamy sees in their property derivatives, but someone must be able to trade.

I'd really fancy selling the 3 year and 5 year futures. Just can't see much downside.

it's interesting that these bearish people don't post this as regularly as they used to - does it not suit their viewpoint :rolleyes:

Generali

kennyboy66 wrote: »

http://www.tfsbrokers.com/pdf/RISK&MANAGE/2009/Sep-09.pdf

I've no idea what kind of volumes this compamy sees in their property derivatives, but someone must be able to trade.

I'd really fancy selling the 3 year and 5 year futures. Just can't see much downside.

Making money from house prices falling via a derrivative isn't the same thing as shorting housing. As the short can't be truly hedged, you won't find the derrivative hedges being put on and unwound having any impact on underlying prices.

You can't short houses as you can't borrow them and sell them.

the_ash_and_the_oak

chucky wrote: »

this has been said since 1999

but sales haven't been at current depressed levels since 1999

chucky

the_ash_and_the_oak wrote: »

but sales haven't been at current depressed levels since 1999

if you check 2005 and i believe 2003 but i'm not 100% sure on this one. the current sales volumes are higher now.

Conrad

macaque wrote: »

So there we have it. One bunch of idiots trying to buy for the wrong reasons off another bunch of idiots who refuse to sell for the wrong reasons.

.

What makes your version of reality more 'real' than thiers?

Thrugelmir

kennyboy66 wrote: »

http://www.tfsbrokers.com/pdf/RISK&MANAGE/2009/Sep-09.pdf

I've no idea what kind of volumes this compamy sees in their property derivatives, but someone must be able to trade.

I'd really fancy selling the 3 year and 5 year futures. Just can't see much downside.

Could you afford the "loss" if you called it incorrectly?

This isn't a penny slot machine gamble.

Generali

kennyboy66 wrote: »

The lack of new supply, particularly new building of family homes in the right part of the UK is perhaps the only thing that supports daft prices. Everything else points in the other direction.

I still thing years of stagnation are ahead for house prices, with the risk now on the downside.

For me the biggest downside risk to house prices has to be pension provision in the UK. If pensions don't come through as advertised (basically inevitable) then people will most likely be forced to turn to their other assets to support them.

For most people, the only significant asset they have other than a pension is their home.

Conrad

Generali wrote: »

For me the biggest downside risk to house prices has to be pension provision in the UK. If pensions don't come through as advertised (basically inevitable) then people will most likely be forced to turn to their other assets to support them.

For most people, the only significant asset they have other than a pension is their home.

This is a key factor that will drive prices up, as people are prepared to put more into housing than they otherwise would have, in order that they might have a larger asset with which to down trade from.

The Brits don't like pensions or other packaged investments any more, so stick those premiums into housing instead.

Thrugelmir

Generali wrote: »

At present, the banks either can't or won't lend enough money to people to support higher levels of transactions at current prices as we can see through the roughly static M4 money supply numbers (that is the money supply including credit creation by banks). If the housing market is going to start functioning again, either lending is going to have to be loosened or prices fall. As the total amount of lending available at present isn't enough to support transactions at current prices if volumes rise.

Where are the banks going to raise the capital to lend from? The major lenders are contracting their overall loan books due to the lack of competetively priced wholesale funding and low retail deposits held. And this is before higher capital requirements are imposed on them.