Tag Archives: house price stability

Is starting a new market like opening a nightclub?

Arzu Uluc.

Property derivatives markets could allow first time buyers to hedge the risk of price rises whilst they save for a deposit and help prevent prices moving away from underlying fundamentals.  But despite this, property derivatives trading is still at a nascent stage. I attribute this to the lack of an appropriate underlying index, a thin secondary market and investor unfamiliarity.  But as Shiller (2008) says, this will change over time: “Starting a new market is like opening a nightclub. Lots of people will want to come if lots of people are there. But, if few people are there, few people want to come. Somehow, nightclubs do get started. So too, do real estate futures markets, but it will take time.”

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