« UK real public spending declines modestly | Main | UK money numbers suggest improving economic prospects »

UK housing rental yield above average: update

Posted on Tuesday, July 3, 2012 at 05:16PM by Registered CommenterSimon Ward | CommentsPost a Comment

The national accounts rental yield – actual plus imputed owner-occupier rents expressed as a percentage of the value of the housing stock – stood at an estimated* 3.94% at the end of the first quarter of 2012, up from a revised 3.89% in the fourth quarter of 2011. This compares with a long-run average of 3.61%, suggesting that house prices are undervalued by about 8% relative to rents – see chart.

The rise in the yield from 3.66% a year earlier (i.e. in the first quarter of 2011) mainly reflects a 7.5% increase in rents in the latest four quarters from the previous year.

The merits of the rental yield as a valuation metric were discussed in a previous post.

*The value of the housing stock is estimated for 2011 and beyond by linking the last published number – for end-2010 – to the ONS (previously DCLG) house price index.

PrintView Printer Friendly Version

EmailEmail Article to Friend

Reader Comments

There are no comments for this journal entry. To create a new comment, use the form below.

PostPost a New Comment

Enter your information below to add a new comment.
Author Email (optional):
Author URL (optional):
Some HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>