In a first for the local market, the Australian Securities Exchange (ASX) has penned an agreement for residential property index derivatives to be launched and traded.
Property data business RP Data and global real estate investment specialist Rismark International will develop the derivatives by measuring house price changes over time through the RP Data-Rismark Hedonic Indices, which has exclusive access to comprehensive property databases in Australia and New Zealand.
According to Rismark managing director Christopher Joye, a residential property derivatives market would be attractive to any investor who wants to buy or sell regional residential property as well as to renters who are currently priced out of the market but want to hedge against future house price increases and developers looking to set benchmarks for pricing and returns.
“A residential property derivatives market has the potential to allow individuals and institutions to cost-effectively access index-linked exposures to the $3.2 trillion residential property asset class,” he said.
“Previously, the high transaction costs associated with residential property investments have made accessing this asset class on a diversified basis difficult.”
The launch date has yet to be announced.
