First read this.
Now then, I really couldn't understand this paragraph:-
Following a slowdown in the annual growth of rental property prices, the total annual return on a property has fallen from its peak of 13.4% in May to 7.3% in November. This is now the equivalent to £11,857 - £7,359 in rent, and £4,498 in capital gains. An investor entering the market now could expect to make a total annual return of £3,433 per rental property .
Reading the article it looks like that in my area, (Eastern England) where I know that property prices are declining, and the article confirms that rents are also declining, the logic would be that landlords are paying their tenants to rent property.
Friday, 17 December 2010
There's Something Going On here, but I can't quite put my finger on what...
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2 comments:
Also, "slow down of growth" is not "decline". If growth is still positive, but simply less than previously then surely annual return can't have fallen, it has simply stopped increasing as rapidly?
Something smells fishy.
L, it is also the case that "in my area (London/Essex border), property prices are declining and rents appear to be fairly flat, the logic would be that landlords are paying their tenants to rent property"
I have calculated that my return to renting (i.e. interest earned + price fall avoided by not buying - rent paid) has been a handsome 8% of the 2008 asking price for the house we are currently renting.
I expect that my return to renting will remain positive for the foreseeable future. For simplicity, assume that the cash we have tucked away = current selling price of house, so 2% interest income - 3% rental yield, prices only have to fall by 1% and we are ahead of the game.
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