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Derivatives Open Door To trading On House Prices - Financial Times

Opportunities are emerging for investors to increase their exposure to the housing market without having to pay high taxes and fees or go through the process of buying a property.

A number of private banks are offering clients the chance to trade property derivatives – investments that allow them to speculate on rising or falling house prices without having to purchase a house. In another development, CityOdds, a financial betting service, has started providing bets on UK house prices for retail customers from as little as £5

Richard White, head of derivatives at Knight Frank, said demand for residential property derivatives is growing fast.

“Demand has increased exponentially as the market has grown in size, from around £300m in 2005 to £2bn in 2008,” he explained.

While the residential property derivatives market is less developed than the commercial equivalent, it is set to play an increasingly important role in portfolios