Protection against drop in value?

amcluesent

I am going to be selling-up from the SE next summer, but am concerned that UK house prices could have fallen by then.

I've heard that there are spread-betting services such as CityIndex where you can put money on the national house price index rising or falling. So I could put money on the price index falling, the gain on the spread-bet offsetting the actuall fall in value. Of course, if house prices rise I would set a stop-loss on the bet.

Anyone able to do the maths on what I would need to do? It almost seems too good to be try that you can significantly minimse the impact of a drop in prices this way if you know your are selling in the future...

richgirl

Other things you need to take into account are -

1. The spread between buying and selling, which is quite large !

2. That house prices futures move AHEAD of the indices, i.e. if prices are going to fall then the house price futures will have already priced in the falls to some degree.

That really, its best left to experienced speculators else you will likely lose both on falling house prices AND badly timed entry / exit into the house price futures !