Australian institutional investors will be able to trade real estate futures contracts with the launch of new house price indices.
Research house RP Data and real estate investment firm Rismark International have created the RP Data-Rismark Indices to develop an Australian property derivatives market.
"Property derivatives markets have begun to boom all around the world, with the Chicago Mercantile Exchange successfully launching residential futures contracts on 10 US cities in May 2006," GFI Asia Pacific senior managing director Jurgen Breuer said.
"In the UK, the world's biggest property derivatives market, there are currently over GBP3 billion worth of over-the-counter commercial and residential property derivatives outstanding."
The RP Data-Rismark indices measure the current risk and returns performance of homes in every suburb, capital city and state in Australia.
"Derivatives are effectively a tool to access property markets, be it commercial or residential. They offer the buyer instant, hassle-free exposure to property returns. It avoids tax, the cost and time delay associated with buying a property, but it's also an amazing tool for asset allocation, offering investors the ability to access markets globally," GFI Group Asia Pacific property derivatives executive Steve Moore said.
It is the first time Australia has had hedonic, or qualititative measures of a house value, indices.
