Quote:
Originally posted by techweenie
Cam, that little place might bring $12-1400 a month.
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There is no way that 1200-1400 a month (14-17k pa) is a sustainable rental yield - it is 3%.
Sooner or later, that has to return to 5% plus, or the rent has to go up.
And the rent won't go up that far because the people who have to rent won't pay. There is only so far this relationship can stretch.
The Economist looks at the relationships of rent/house prices and rent/income, and as far as I am concerned this is the only logical way of looking at it
over time. Eventually housing has to reflect the same fundamentals as every other asset class - what income it can earn.