Real Estate Investments AM0000_000_000000 Housing Derivatives Piet Eichholtz.

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Presentation transcript:

Real Estate Investments AM0000_000_ Housing Derivatives Piet Eichholtz

Real Estate Investments AM0000_000_ Housingderivatives The risk of home-ownership Home-ownership in the Netherlands The hart of the matter Types of housing derivatives Will there be housing derivatives in Holland? Enter Sheet: Real price index 62-94

Real Estate Investments AM0000_000_ The risk of home-ownership Recent figures Netherlands, France and UK Historic figures Herengracht index Types of risk: Total risk Market risk Specific risk - within residential market - national and international - with respect to other wealth-components

Real Estate Investments AM0000_000_ Correlation coefficients of annual nominal returns based on the weighted repeate sales indices for Fr Gr Dr Ov Ge Ut Nh Zh Nb Li NL Fr - Gr.87 - Dr Ov Ge Ut Nh Zh Nb Li NL

Real Estate Investments AM0000_000_ Summary Statistics Period StocksBonds Homes Average Return12.99%7.85%7.74% Standard Deviation13.14%6.72%10.01% Correlation Coefficients Stocks1.00 Bonds Homes Inflation Enter Sheet: home-ownership-income

Real Estate Investments AM0000_000_ Availability of homes for lower incomes Subsidized Sales of Segmentation Competition New houses Rentals Owner market Rentals Germany+/ Netherlands Sweden ++ - France Denmark -+/- + US -+/ Canada + Belgium UK

Real Estate Investments AM0000_000_ Financial Instrument of Governments Savings- Unique Continuous Low Facilities Support Support Interest rate Germany Netherlands Sweden - + France Denmark US + Canada + Belgium UK

Real Estate Investments AM0000_000_ Home-ownership in the Netherlands Past and Present Relationship with income Financing Governmental interference Why? How?

Real Estate Investments AM0000_000_ Tax treatment of Home-ownership Rental valueInterest deduction Germanynonenone Netherlandsforfait unlimited Sweden2% first partunlimited 8% higher part Francenonetax-credit (25%) max: 5yrs, amount, income Denmark2.5% < 1.3 mlntax credit 50% 7.5% > 1.3 mln USnonemax: mortgage debt Canadanonenone Belgiumforfait max: rental value UKnonelimited to first £30,000

Real Estate Investments AM0000_000_ The hart of the matter Specific risks are the cost of home-ownership Stimulating home-ownership for low incomes How can this be done? For whom does this apply?

Real Estate Investments AM0000_000_ Types of housing derivatives Insurance: Home equity insurance Options/futures Housing trusts How does this work? Cash-settlement on indices

Real Estate Investments AM0000_000_ Will housing derivatives arise in Holland? Discussion Are the investors? Is there consumer demand? What will insurance companies do? Are there politicians that understand the topic?