I don't know why is this happening but I think its related to specular highlight problem. I'm 99% sure that problem isn't in shader.
View from other angle:
The problem only occurs when I enter and look down into house. It doesn't happen when I'm far from the house.
If you think that it is specular related, then disabling the specular calculations should give you some clue.
Cheers!
If I'm not wrong this is shadows being casted?
If so, please show us how you handle shadows when testing for occlusion. Is it possible that your light ray is parralel to the ground? ( Could cause some artifacts, depends )
And all of the above suggestions are good.
You think it's related to specular calculations and you're 99 % sure it's not in shaders? That means you are either using the FFP and you are trying to say that there's something wrong in it, or I have no clue 
Problem vanished when I disabled normal mapping. This was caused by compressing normal maps. Thank you for responding everyone.
I still don't know what the problem was. Maybe his revolutionary real time ray traced global illumination algorithm wasn't working for all we know...
I still don't know what the problem was. Maybe his revolutionary real time ray traced global illumination algorithm wasn't working for all we know...
It was caused by compressing normal maps to DXT1 format.
