Is there a UK house-price index that one can speculate on?
After all, the capitalisation of the UK house sector is almost 3 times as
big as the capitalisation of the London Stock Exchange.
av. UK house price: 228,000; no. of houses: ~ 25 million;
total capitalisation: 5.7 trillion
London Stock Exchange:
total capitalisation: 2.2 trillion
Not sure how they compare for volume.
Not AFAIK. Could try your local bookies ;-)
'Could be capitalised at' - there's no way in practice you could produce
an accurate figure. And no real way it could happen, unless you 'do a
A good deal (>30%) is not owned but tenanted, therefore your figure
would be lower. Not sure where £228,000 comes from either. Sounds way
If you want to speculate on property, buy property, I'd have thought. Or
invest in a property developer (etc).
Rob wrote in
I live in the Barbican, so... (only joking! :) )
Not sure what you mean by 'accurate'; not all shares are offered at
market. AFAIAA, the figure is got by taking, for each company listed, the
product of its share price and the number of shares. The figure of USD
3.6 trn for the LSE is widely quoted, including by the LSE itself.
(Comparative figures are at:
Sure, it's not real value in any sense, because if all the shares were
offered at market, you wouldn't get the currently quoted price. But the
figure is still a kind of measure of the (fictitious) value of all LSE-
tradable shares taken together.
Share-holdings can also be leased out or have marks put on them or the
228,095 is the Land Registry figure for the average (presumably the
mean) UK sale price in the second quarter of 2011:
The Land Registry figure is the best figure available. Of course it's
open to various objections (how many houses were sold or even offered on
Eaton Square or in Kensington Palace Gardens?), but so is the market
capitalisation figure for then LSE. I think the 5.7 trn to 2.2 trn is
going to be close to the best we can get. Both amounts contain a large
amount of 'value' that is largely fictitious...
We are getting close to my point here! How can we speculate in the other
direction? Only an idiot would go long on residential property at the
current time. Also you have to buy actual property in an actual area.
With shares you can buy or sell an index instrument.
In this sense, the residential property market is hugely imbalanced
compared to the share market.
The huge bubble in the housing market is explicable in terms of the
decades-long push by money-lenders to get as many people as possible into
as big debt as possible. For most people in the housing market, it's easy
to 'speculate' long (although it's not really speculation because they
need somewhere to live), but practically impossible to speculate short. I
am tending to think that what Bob Beckman said in the 1980s was right; he
just got his time-scale wrong.
See above. Sure, one could short a developer, but there doesn't seem to
be a shortable index for the entire already-built residential property
market, as there is for the (much smaller) market of already-issued
Rob wrote in
Sure, not all the shares will be sold at market at the same time, but the
capitalisation figure of US 3.6 trn is widely quoted for the London Stock
Exchange, including by the exchange itself. I'd suppose it's calculated
by summing the products of each share price with how many of the said
share have been issued.
Some shares are also leased out or held subject to agreements, but I take
your point with regard to freehold values of tenanted properties.
In any case, the value represented by the figures for both shares and
houses are fictitious.
It's the latest available Land Registry figure for the average
(presumably the mean) house sale price in the UK, namely for the second
quarter of 2011.
I'd want to go short, not long. Only a nutter would invest in residential
property at the present time.
Of course one could short a property developer, but there don't seem to
be any index instruments comparable to those for shares.
We are getting close to the next point I was going to make. The UK house
sector is three times as large as the combined capitalisation of all
companies quoted on the London Stock Exchange...but speculation is really
only possible in one direction - upwards.
The writing must surely be on the wall. I'm throwing my lot in with what
Bob Beckman said in the early 1980s. He got his time-scale wrong.
Oliver Catton wrote in
Or possibly it's the median or some kind of weighted average using the LR's
HPI, but it's a better indicator than figures from money-lenders, e.g. the
Halifax figure of 164000, which isn't based on a representative sample of
sales. Even today a fair proportion of houses are bought with people's own
money rather than money they've borrowed.
Though the LR figures are skewed upwards because they ignore sales that are
considered as "under value".
Whilst it might be fair to ignore transactions between family members on
this basis it is not fair to exclude sales of repossessed properties. As
banks are legally bound to get the "best" price for such properties it is
difficult IMHO to make a sustainable argument that such sales are under
value, but this is exactly what the LR claim. On the contrary, I would
suggest that such sales are sales at EXACT value and all others are over
They do to a small extent. They do have some notion of a "price below which
we won't sell" except that it will be a sensible view of the value and not
just "the man from Foxtons told us that one person in a million will pay us
this so we'll wait until he comes along and makes us an offer".
Agreed, especially as properties voluntarily sold through an auction are
included, but repossession sold the same way are not!