UK housing gets derivatives outlook boost

* Prices seen to fall by further 1 pct by end-2009

* Sentiment warms on back of bank results, economic data

By Sinead Cruise

LONDON, Aug 11 (Reuters) - Talk of an upturn in Britain's
property market has prompted derivatives traders to reverse bets
on UK house price falls, with values expected to rise by 0.6
percent by end-2010 versus an 11 percent fall seen in June,
indicative data shows.

Participants in Britain's real estate derivatives market are
backing a steady recovery in the housing market as competition
hots up among homebuyers, and as encouraging financial results
from key banks raise hopes of a spurt in mortgage lending.

Average UK house prices are expected to fall by a further 1
percent by the end of this year, the data shows, compared to
late June projections of a 7.5 percent drop.

"In January, the expectation was that house prices had a
further 34 percent to fall, in addition to the 21 percent fall
already seen since the market peaked in August 2007," said
Michel Heller, a trader at derivatives brokerage GFI CBRE.

"The property futures market is expecting a much less
pronounced fall in the short-term than was previously expected,
and the recovery to current levels and growth thereafter will
come sooner than previously expected," Heller said.

On Monday, Britain's Centre for Economics and Business
Research said UK house prices were likely to fall just 3 percent
more over the remainder of 2009, before rising by 2 percent in
2010. [ID:nL924065]

However, the RICS has cautioned the housing market will
still face significant challenges next year, as a lack of supply
threatened housing affordability in the longer term.

Average UK house prices, as measured by the non-seasonally
adjusted Halifax House price index, now stand at 160,686
pounds in July from a peak of 201,081 pounds in August 2007.

Below are expected annualised percentage changes in UK house
prices based on non-seasonally adjusted Halifax House Price
Index derivatives.

The young market provides investors with an opportunity to
adjust or hedge exposure to the UK housing market synthetically
-- in a cheaper and more efficient way than buying or selling
bricks and mortar.

The table is based on indicative HPI swaps mid-price data
provided by interbank brokers Tradition Property, CB Richard
Ellis-GFI and Tullett Prebon and is made up of simple averages.

Date 1YR 2YR 5YR 10YR 20YR

10/06/09 -1 0.3 1.8 2.1 3.43

30/06/09 -7.5 -5.5 -1.37 0.9 2.63

18/05/09 -11.5 -9.3 -2.7 0.4 2.3

2/04/09 -18.7 -13.5 -4.3 -0.4 1.9

17/02/09 -20.3 -14.2 -5.1 -0.05 2

06/01/09 -19.7 -14.7 -5.5 0.15 2

11/09/08 -16.2 -11.2 -3.1 1.1 3

11/08/08 -15.5 -9.8 -3.0 1.0 2.9

11/07/08 -15.8 -10.5 -3.2 0.8 3.0

06/06/08 -13.2 -9.8 -3.0 0.1 2.2

06/05/08 -13.8 -9.1 -3.1 0.3 2.3

04/04/08 -8.3 -5.8 -2.0 0.5 2.4

14/02/08 -8.2 -5.7 -1.8 0.5 2.3

08/01/08 -9.0 -4.9 -1.7 0.4 2.6

18/12/07 -9.0 -4.8 -1.7 0.4 2.7

5/12/07 -9.7 -5.1 -1.4 0.5 2.7

29/11/07 -7.0 -3.8 -1.2 0.6 2.7

06/11/07 -2.5 -1.3 -0.9 0.8 2.8

20/9/07 -2.5 -1.0 0.2 1.2 2.5

1/9/07 -1.0 0.0 0.8 1.3 2.6

1/8/07 2.3 2.0 1.6 1.7 2.8

1/1/07 4.3 2.7 2.7 2.5 2.7

(Reporting by Sinead Cruise; editing by Simon Jessop)
(See www.reutersrealestate.com for the global service for real
estate professionals from Reuters)