In times of trouble many investors will revert to investments offering high yields and the property market is no different. Do you think investors will soon switch back to capital growth strategies over investment yields?
The difference between base rates and rental yields is still significant. Until we see interest rates move higher it is difficult to justify switching relatively high yielding properties into one’s which may create a capital gain at some point in the future.
I think there may be further downside in house prices before we see any major upside. As a consequence, the risks as well as much better rental yield compared to interest rates will likely see this trend continue for the moment.
This is a tough one; we have near historic low interest rates and rental yields which compare extremely favourably. Until we see a significant increase in interest rates, I think many people will err on the side of caution and look towards relatively solid rental yields.
At this moment in time it seems unlikely that UK base rates will increase in the short to medium term with further Brexit uncertainty. As a consequence, I think that focus on rental yields will continue and become an even more important factor for those investors looking for a degree of stability.