The Pascometer is definitely busted:
There are a number of estimates of rental yields around, none of them especially authoritative. In a comprehensive assessment of the state of the housing boom, AMP chief economist Shane Oliver put the gross rental yield of housing at about 2.9 per cent, which, after costs, comes down to a net yield of around one per cent. Pre-tax, post-tax, negatively geared or whatever, that’s lousy. You can get more from a bank deposit.
So with such low yield, the investor has to be very confident of capital growth continuing. But for how long and at what rate for the Sydney market after such a massive couple of years? It’s not an easy question.
Having sold and bought in this market over the past month, there are two other anecdotal factors.
Real estate agents in the field confirm that the gentle APRA macroprudential squeeze is being felt. Bank valuers are proving tougher. Finance is not being taken for granted. That’s starting to show up in finance statistics.
…In the meantime, are you feeling lucky?
