1. Real Estate Investments AM0000_000_000000 Housing Derivatives Piet Eichholtz

2. Real Estate Investments AM0000_000_000000 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

3. Real Estate Investments AM0000_000_000000 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

4. Real Estate Investments AM0000_000_000000 Correlation coefficients of annual nominal returns based on the weighted repeate sales indices for 1974-1995 Fr Gr Dr Ov Ge Ut Nh Zh Nb Li NL Fr - Gr.87 - Dr.84.84 - Ov.86.87.85 - Ge.88.91.90.93 - Ut.84.86.87.88.95 - Nh.84.87.87.88.95.97 - Zh.86.88.87.89.96.96.96 - Nb.89.90.88.91.96.95.95.95 - Li.67.70.70.74.76.74.75.75.75 - NL.89.91.90.93.98.95.95.96.96.75 -

5. Real Estate Investments AM0000_000_000000 Summary Statistics Period 1975-1995 StocksBonds Homes Average Return12.99%7.85%7.74% Standard Deviation13.14%6.72%10.01% Correlation Coefficients Stocks1.00 Bonds0.241.00 Homes0.010.201.00 Inflation0.02 -0.010.09 Enter Sheet: home-ownership-income

6. Real Estate Investments AM0000_000_000000 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 -++ ++ +

7. Real Estate Investments AM0000_000_000000 Financial Instrument of Governments Savings- Unique Continuous Low Facilities Support Support Interest rate Germany + - - + Netherlands -+ + + Sweden - + France +- - + Denmark +- - - US + Canada + Belgium -+ - + UK -+ - -

8. Real Estate Investments AM0000_000_000000 Home-ownership in the Netherlands Past and Present Relationship with income Financing Governmental interference Why? How?

9. Real Estate Investments AM0000_000_000000 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

10. Real Estate Investments AM0000_000_000000 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?

11. Real Estate Investments AM0000_000_000000 Types of housing derivatives Insurance: Home equity insurance Options/futures Housing trusts How does this work? Cash-settlement on indices

12. Real Estate Investments AM0000_000_000000 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?