Trading in residential property derivatives has slowed almost to a standstill, owing to widespread fears about the housing market that have hit direct sales. Financial Times

Bankers say there are few buyers for residential derivatives, which allow investors to bet against movements in the house price index.

'I would not like to speculate about where the bid prices could be right now,' said Philip Ljubic, a property derivatives banker at ABN Amro. 'There is no one actively bidding down the curve. Everyone wants to sell.' It is a relatively new market, but it has been held up as the future of property investment, given the supposed liquidity of trading in an otherwise illiquid asset.

But buyers have become reluctant in a market dictated by bad news unless they see very cheap pricing, while there has been a wave of selling by institutions looking to hedge unwelcome property exposure.

The news comes as IPD is today set to reveal that a record amount of commercial property derivatives were traded in the first quarter.