Cant disagree with this article – http://www.smh.com.au/business/the-economy/rental-growth-slowdown-signals-residential-property-bust-on-the-way-20150626-ghxkdr
Yesterday in Sydney we were outbid on a property (well it went for more than I wanted to pay) and eventually sold for $692,000 rent was $450pw gross rental yields (3.4%) and that’s before management and expenses $6400 (2.6%) and interest $31,000 (-2%) so basically it would have been costing you $14,000 a year to service…..not bad…..but not great.
Eg if long term capital growth was 8% then its going up $55,000 per year for $14,000 servicing costs but if we have a capital increase flattening as happens at the top of a boom eg 2% per year…..then you are only just breaking even.
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