This did not answer the question hahaha. This entire summary is based around rental yields. Rental yield is one of the least important things investors consider when buying property. And as far as your indication that rental yields affect servicing and thus will affect price growth, is not reality. There are countless areas in Sydney (with multi-million $ properties), where the yield would not service the debt on a 80/20 LVR. The ONLY indicator of price growth in any market is owner occupier demand. The truth is in the data. Supply & demand, that is it! Rental yields are almost irrelevant to an investor who knows what their looking for. So your advice is misleading my friend.
Least important? Rental yield as a proportion of the asset value is THE most important factor along with interest rates. Sure, you can rely solely on the capital gain on the property value but this becomes more risky as property value increases - keep in mind investors have alternatives. For property to be worth it for an investor, the annual % ROI must be at least equal to a term deposit when you add the rental yield, capital gain and deduct expenses like interest and rates. High property prices over the million dollar mark erodes the rental yield as a % of the asset value. Worse still, capital gain increases are less at higher property price as buyers are less able to afford the mortgage repayments putting the breaks on buyers inflating the price of property. We have already seen this dynamic play out in parts of Melbourne and Sydney where property prices have ground to a halt. You reference 'data' but property prices changes are -1% in Melbourne and 6% in Sydney with Brisbane sitting at 13% but trending sharply down.
Typical agent redirection...prices are dropping as we are entering in a deflation cycle . That is why the seasoned investors and high net investors flood the market first.
This did not answer the question hahaha. This entire summary is based around rental yields. Rental yield is one of the least important things investors consider when buying property. And as far as your indication that rental yields affect servicing and thus will affect price growth, is not reality. There are countless areas in Sydney (with multi-million $ properties), where the yield would not service the debt on a 80/20 LVR. The ONLY indicator of price growth in any market is owner occupier demand. The truth is in the data. Supply & demand, that is it! Rental yields are almost irrelevant to an investor who knows what their looking for. So your advice is misleading my friend.
Least important? Rental yield as a proportion of the asset value is THE most important factor along with interest rates.
Sure, you can rely solely on the capital gain on the property value but this becomes more risky as property value increases - keep in mind investors have alternatives.
For property to be worth it for an investor, the annual % ROI must be at least equal to a term deposit when you add the rental yield, capital gain and deduct expenses like interest and rates.
High property prices over the million dollar mark erodes the rental yield as a % of the asset value. Worse still, capital gain increases are less at higher property price as buyers are less able to afford the mortgage repayments putting the breaks on buyers inflating the price of property.
We have already seen this dynamic play out in parts of Melbourne and Sydney where property prices have ground to a halt. You reference 'data' but property prices changes are -1% in Melbourne and 6% in Sydney with Brisbane sitting at 13% but trending sharply down.
Typical agent redirection...prices are dropping as we are entering in a deflation cycle . That is why the seasoned investors and high net investors flood the market first.