Indemnities for long‐term price risk in the UK housing market

Abstract

Discusses the features which distinguish the market for residential property from the markets for other assets. Proposes that financial institutions should offer house‐buyers indemnity policies which pay out an amount related to any fall in the level of a general index of house prices, on the sale of the house at a loss at any time during the mortgage term. To facilitate hedging the risk of a portfolio of such policies (and therefore, the pricing of the policies), a market in “perpetual futures” on indices of housing assets is proposed. Discusses possible users of these contracts and outlines further research.

Citation

Guy Thomas, R. (1996), "Indemnities for long‐term price risk in the UK housing market", Journal of Property Finance, Vol. 7 No. 3, pp. 38-52. https://doi.org/10.1108/09588689610127145