Spread bet on UK house prices to hedge risk of house price fall?

Barney683

I will be selling my property in a few months but am concerned about a major dip in house prices due to COVID 19.

I would like to hedge that risk with a spread bet, but I cannot find any company which offers a bet on house price indices. It appears IG used to do it, but it appears not so any more (I have an account there and can't see anything like it).

Does anyone know if this is possible at all any more?

Thanks

davidmcn

Don't know the answer but probably more for the Betting forum than here.

Barney683

davidmcn said:

Don't know the answer but probably more for the Betting forum than here.

Thanks. Matched betting is very different to hedging via spread bets (which is insurance, basically) - but I guess someone there might know.

davidmcn said:

Don't know the answer but probably more for the Betting forum than here.

numbercruncher8

Don't think you can do it any more. I do remember them offering it, but the spread was quite high, so never bothered.
Even if they did, would you really be making a saving? I read the stock markets (presumably residential ETFs) priced in a 12% drop, so the futures would start from there, maybe more. You wouldn't be able to hedge today's price, even if you could every man and his dog would be betting on prices going down which would have the same effect.
I think you could make a synthetic hedge by shorting Rightmove, OnTheMarket, PurpleBricks, but that comes with a theoretical (but unlikely) unlimited loss.

Thrugelmir

Late to the party to hedge such a risk. You'd struggle to find a counterparty at a competitive cost. A spike in deaths in itself will bring a lot of property onto the market in a short window. 

JayRitchie

Be careful that you understand the risks or can pay for a stop loss. Spread betting can be very volatile. if prices surge (fear of hyperinflation for example) you could be in all sorts of trouble.

Thrugelmir

JayRitchie said:

Be careful that you understand the risks or can pay for a stop loss. Spread betting can be very volatile. if prices surge (fear of hyperinflation for example) you could be in all sorts of trouble.

Deflation is most likely the bigger risk. 

theartfullodger

How would you insure yourself against spread betting system going bust?

Highly likely over the coming months, then you'd have lost even more money.

davidmcn

theartfullodger said:

How would you insure yourself against spread betting system going bust?

By betting that it will go bust?

Barney683

JayRitchie said:

Be careful that you understand the risks or can pay for a stop loss. Spread betting can be very volatile. if prices surge (fear of hyperinflation for example) you could be in all sorts of trouble.

  Theoretically, apart from the cost of the hedge (i.e. the spread) it is "risk free" as my intention to sell is very definite (and hedge would be at £1000 per -£1000 movement). Of course, if house prices shot up I would have a stop loss in place (or just rely on the position getting closed when margin runs out) - quite a minimal risk I think; much riskier is not hedging. Also there is the fact that regional house prices fall/rise at different rates, but again, still riskier to not hedge.

Barney683

numbercruncher8 said:

Don't think you can do it any more. I do remember them offering it, but the spread was quite high, so never bothered.
Even if they did, would you really be making a saving? I read the stock markets (presumably residential ETFs) priced in a 12% drop, so the futures would start from there, maybe more. You wouldn't be able to hedge today's price, even if you could every man and his dog would be betting on prices going down which would have the same effect.
I think you could make a synthetic hedge by shorting Rightmove, OnTheMarket, PurpleBricks, but that comes with a theoretical (but unlikely) unlimited loss.

davidmcn said:

theartfullodger said:

How would you insure yourself against spread betting system going bust?

By betting that it will go bust?

I'm guessing you're saying that tougue-in-cheek. Though of course it is actually possible - a put option on say IG Index stock going close to zero (placed with another spread bet firm, of course!).

I would imagine that spread betting companies are doing absolutely roaring trade right now though.