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Rather than buying property in the UK, are there indices or funds that closely follow house price growth/loss in the UK? Property developers tend to have their own growth patterns.

My problem is I won't have the time to purchase properties and maintain them so I would rather invest in a stock or index that tracks house price growth.

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  • What do you mean by "house" prices? Would residential apartment blocks suit your fancy? What would you consider to be a good metric for alignment? May 11 at 1:55
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    "Questions seeking product, service recommendations or other off-site resources are off-topic because they tend to become obsolete quickly. Instead, describe your situation and the specific problem you're trying to solve."
    – Flux
    May 11 at 2:40
  • Updated question with problem statement. I would be looking at something that would track overall UK house average price movement, or as closely as possible.
    – User101
    May 11 at 8:19
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    What would be the underlying investments of such a fund? Houses, presumably? And what would happen to the fund when investors perceived the market dropping and all rushed to try to redeem their units? May 11 at 9:44
  • @marktristan I would expect such a financial instrument to be an exchange-traded note (ETN) rather than an exchange-traded fund (ETF).
    – Flux
    May 11 at 12:34
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Worth noting that factoring in the approximate depreciation and transaction costs that holding residential property entails, residential property values in the UK historically in even London and the South East barely beat inflation, so this isn't a fund you would particularly want to own.

If you're not living in a house, you only have two options: Leave it empty or rent it out. Empty house depreciate even more rapidly than rented, so in that case you're paying a lot of money to someone keeping ghost properties standing up and waterproof that kills your return. If renting them out you're either a pro landlord with its huge cost on your time, or effectively paying someone to do it, both of which cost a lot and kill your returns. Final option is owning shares in a company/REIT that does it all for you which will also behave very differently from what you after due to their different respective risk and cost profiles.

UK housing index prices endlessly going up in a nice smooth line is basically an illusion sustained by no one ever putting the transaction and maintenance costs into the index, and by large numbers of people living in the house and doing a lot of the maintenance work and costs without really noticing the very real cost it actually is. It's not something you can actually achieve or replicate, and this is reflected well by the investment options around it.

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A few UK-listed investable options I'm aware of which might provide exposure to UK residential property and/or ownership of a buy(or build) to let business without the hassle of actually doing it yourself:

These two are basically REITs (real estate investment trusts) which own residential property and rent it out:

These two are the same sort of thing but are more focussed on "social housing":

And a new entrant aiming to house the homeless:

None of them have much history yet.

With a longer history there is "TM Home Investor" fund https://homeinvestor.fund/ (formerly "Hearthstone Residential"). It's relatively small (£60million) compared with the newer REITs listed above though, and the open-ended (fund) structure is probably best avoided for illiquid assets. The annual reports are well worth a read for understanding the economics of this sort of operation though.

Also of interest might be student housing specialists ESP, DIGS and UTG, or companies like PSDL which although listed on the London stock exchange, are actually investors in Berlin rental property.

From time to time over the years there have also been various savings accounts launched with their interest rate linked to house-price indices (most recently Castle Trust's "HOUSA" products), but I'm not aware of any currently available.

Before investing in anything like this, I can't stress highly enough the importance of doing your own research and understanding the business and its risks (and costs!).

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There used to be an ETF that tracked US housing prices, but it shut down quickly. It had elements of an exchange-traded note, promising exposure over a ten-year period.

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