Get ready for Paris home price index futures!

Eurnonext is preparing to launch a Paris home price index futures contract later this year.  They’ve sent out “Save the Date” notice for a presentation on May 23rd (see below) to discuss the reference index, and other “perspectives and innovations”.  My hope is that this launch will revitalize discussion of the potential benefits of home price hedging, both in Europe and here in the States.

Topics include:

  • Sectorial real estate market review
  • Summary of institutional investor expectations and initiatives launched by Euronext to support investment in the sector
  • Presentation of the new index on the Parisian residential market developed by Compass in partnership with Kalstone and Euronext futures on this index
  • Risk coverage and performance exposure of the real estate sector

I’ve had several conversations with the parties involved and they seemed to have incorporated changes versus the CME Case Shiller methodology.  I believe that the most notable difference is the approach taken by Compass (the index provider) is to create an index with a much smaller geographic range.   While Core Logic has created  Case Shiller-style indices on much smaller areas (see page 39 of CS Methodology in the Reports section), such indices might seem to be somewhat more prone to “signal/noise” issues when home price turnover (or pairs count) is smaller.  I understand that  Compass index, in an effort to provide an index on a smaller geographic area, might trade off the rigor of a pure repeat-sales index, with a blend of repeat-sales and hedonic approaches, to provide a smoother, very local index.

I have more ideas if anyone cares to chat but will wait until Euronext and Compass distribute their methodology and launch calendar, before writing anything here.  (BTW- I’m off to Paris this weekend for some informal due diligence!)

If you have any questions about the May 23rd event, please contact Margot Maurier <MMaurier@euronext.com> , or me (johnhdolan@homepricefutures.com).  I will update this page as I learn more.

Thanks,

John

 

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