View more on these topics

Miles backing futures’ view on property falls

Morgan Stanley chief economist David Miles believes moves in the futures market anticipating a 10 per cent fall in house prices in the next year are on the right track.

Speaking at last week’s Association of British Insurers research conference in London, Miles said he also agreed with future market forecasts suggesting a 3 to 4 per cent decline the year after followed by a flattening out and then a rise.

He told delegates that in current market conditions, industry “talk is cheap”, with many vested interests being voiced, and that traders actually placing bets with money in the derivatives market are the best indicator.

He said using the example of a futures contract where the underlying asset is Halifax’s house price index, the forecast would imply that the index a year from now would be close to 10 per cent lower than current levels.

He said: “You might look at that and say that would be Armageddon. I think that one should see that 10 per cent in context. A 10 per cent fall in average house prices would mean prices would be back on average to where they were in September or October 2006 so most people who bought a house more than a year ago would find on average that their house prices were no lower than they were.”

Miles said Morgan Stanley has tried to calculate how much of the big increase in real house prices in recent years is down to fundamental factors, such as higher incomes and increases in population, and how much is due to other factors. He says the estimate is that around 50-60 per cent can be accounted for by fundamentals.

Recommended

Firm in liquidation remains on FSA register

Concerns have arisen over consumer protection after a Birmingham IFA remained on the FSA register despite having gone into liquidation last September.Stourbridge-based Paul Davies & Associates appointed corporate recovery firm Butcher Woods as liquidator last September but is still listed as authorised on the FSA register, with no changes to its permissions.The FSA says it […]

Adviser’s Standard protest

An adviser has withdrawn all his business from Standard Life after accusing the provider of trying to poach clients through direct mailings.Clifton Business Consultancy principal director Glyn Hazell says Standard is trying to grab IFA clients through marketing literature offering them the opportunity to go direct in general product and life cover mailings. He says […]

RBS profits up 9 per cent

Royal Bank of Scotland has reported an increase in group operating profits by 9 per cent to £10,282 billion.Profit before tax increased to £9.9bn in 2007, including the recent purchase of ABN Amro, up from £9.2bn in 2006.It was hit by a writedown of £1.16bn as a result of the US sub-prime mortgage crisis.Average mortgage […]

Cash landing

The importance of dividends has come to the fore once again. Take Northern Rock investors. Hundreds of thousands of the former building society members got free shares worth around £4.55 each when it demutualised in 1997.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com