Bricks and mortar

As the housing market in the UK has taken off, so have the ways of riding the wave without ever going near an estate agent. But issuers of property-linked products must adapt to the changing nature of the market to keep investors interested, as Patrick Fletcher discovers

Issuers of UK house price index (HPI)-linked bonds (see box, p28) are facing a potential sea-change in their industry. With analysts increasingly predicting a prolonged slowdown in property price rises, potential buyers of short-term HPI-linked bonds could be hard to find as the risk increases of a bond maturing at nothing more than the original investment. Surprisingly, however, the HPI-linked market has so far been attached to simple, guaranteed upside-only bonds. But that may be about to