Ive never posted on the property forum but my biggest concern at the moment is the record low rental yields we are seeing across Melbourne.
Nobody is dare talking about it.
Many properties are yielding under 4%.
Very shortly the cash rate (a risk free asset) will be yielding more than a residential property.
Rents are going up (if at all) nowhere near the rate of capital growth. Property market was operating in an artificial environment because of record low rates and increased FHOG. Increased demand for home ownership decreased demand for rental properties. The scales are not balanced.
If the ASX200 were valued at a yield of 4%, the market would be at 8000 points. Shorters could take advantage of this on the ASX but not so with the property market.
Also the size of the mortgages are increasing relatively quicker than the average salary. This is another reason for concern especially given we are in a tightening monetary policy environment.
