Nationwide Report out. House Prices Down 0.8% in Oct

PasturesNew

This report was issued at 7am this morning. It is the monthly Nationwide report.

Prices fell 0.8% in October

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=economicIndicatorsNews&storyID=2007-11-29T070015Z_01_L2635039_RTRIDST_0_BRITAIN-NATIONWIDE.XML

"The Nationwide is predicting house prices staying unchanged for most of 2008. Financial markets, meanwhile, have been predicting a fall of as much as 7 percent."

Generali

The thing about the markets predicting falls of 7% is interesting. Are these actual bets by people that think that the market is going to fall or is it that savvy investors are buying a hedge against falling prices?

There's a book called Fooled by Randomness where a conversation is described:

Person 1: Are you a bull or a bear on equities
Person 2: I don't think we should buy equities
Person 1: So you're bearish
Person 2: No, I just think we shouldn't buy
Person 1: So you think prices will fall, you're a bear
Person 2: No. I just think that if prices go up it'll be by a very small amount but if they fall we'll lose a fortune.
Person 1: Ah...

What do you think the potential up and downside risks are to property right now? Maybe a good idea to have a hedge in place rather than selling up and having to pay CGT.

Presumably, if it's structured in the right way, you could offset any gain on the hedge against falls in house prices (not sure about that last bit!).

tonydee

"The Nationwide is predicting house prices staying unchanged for most of 2008."

With a 1.1% rise last month and a 0.8% drop this month, I think the above statement is pretty accurate.

Generali

I think it's unlikely personally.