House prices are expected to fall by almost 30% during the next three years according to the leading indices of property price futures, with more investors than ever looking to bet on long-term property prices as the value of their own homes fall.
About £50,000 will be wiped off the value of the UK average house price of £185,000 by 2011 judging by current trading on spread betting platforms, more than most commentators currently expect.
Residential price derivatives, which are commonly used by institutional investors, are also implying a fall of between 25% and 30%, according to Philip Ljubic, director of property derivatives at ABN Amro.
The pessimistic outlook among investors in housing prices is in stark contrast to the prediction by the National Housing Federation last week that average house prices in England will rise 25% by 2013, with a recovery expected to begin in 2010.
The market for investing in the future prices of homes is an effective means of gauging sentiment. For retail investors, the best way to invest is through spread betting.
Cantor Spreadfair, which tracks national and London house prices to the end of 2011, says the market has never been more popular.