Newspaper article The Evening Standard (London, England)

House Prices Bite Back at the Property Bears; City Trader

Newspaper article The Evening Standard (London, England)

House Prices Bite Back at the Property Bears; City Trader

Article excerpt

Byline: ANGUS MCCRONE

CITY professional turned property developer Neil Campbell has a large short position in the English and Welsh housing market. He believes the house-price inflation of recent years cannot continue.

"There are not nearly so many first-time buyers now," Campbell says.

"Every new development seems to be going to an investor, but I don't think these people understand the gravity of such a highly geared investment."

His bearishness led him to make three separate down-bets on house-price futures quoted by bookmaker City Index.

He has already closed one of these at a profit: a down-bet from 163 ([pounds sterling]163,000) on City's quote for the average house price in England and Wales in June 2004, closed at 143 ([pounds sterling]143,000) a few weeks later.

However, Campbell's story is not typical of those of the speculators who have attempted to make money by gambling on house-price movements since City Index and its rival IG Index started quoting spreads last year.

Many punters have lost money - partly because the property market has proved much better than they expected it to be at withstanding blows to confidence, such as the 9.11 terror attacks on the US in 2001 and the Iraq war.

The latest Nationwide figures, out last Tuesday, showed UK houseprice inflation stubbornly high at 17.9% year-on-year.

The latest spread betting prices imply that London property values will decline in the next 12 months but only by just over 4% - not the 10% correction that was implied in February.

City Index's quote for the average Greater London property in June 2004 for instance was at 217.5-222 ([pounds sterling]217,500 to [pounds sterling]222,000) in February, and has now rebounded to 227.5-232 ([pounds sterling]227,500 to [pounds sterling]232,000).

Ashley Tatham at City Index says: "In the last few months, punters have struggled to make money. …

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