Landlords feeling the pinch
5:00AM Wednesday March 07, 2007
By Brian Fallow ?

House prices have soared while rents have barely moved, leading many to conclude rental property is overvalued. But research by economists challenges that conclusion.

Over the past five years house prices have doubled while rents have risen just 14 per cent.

As a result, rental yields have fallen from nearly 6 per cent to little more than 3 per cent.

Rather than seeing that as evidence of a house price bubble, Westpac economists Dominick Stephens and Brendan O'Donovan argue in a report published yesterday that the fall in yields can be explained by a trend towards lower mortgage rates and the rise in the top income tax rate in 2000.

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