All-property yields saw a large rise in August, as concerns around valuations increased. (See Chart 1.) And, with the energy support package set to boost interest rates and the economy probably already in a mild recession, yields will see further gains over the next year or so. Household real incomes are now set for a smaller decline, but all-property rental growth will not avoid a slowdown. Indeed, consumer-facing sectors such as leisure and shops are once again seeing month-on-month falls in rent. Not surprisingly, investors are showing increased caution and following a strong first half of the year property transactions slowed significantly in July. Total returns are still strongest in the industrial sector, but concerns over valuations are now driving up yields and the sector has seen the sharpest slowdown in returns in recent months.
Become a member to read more
This is premium content that requires an active Capital Economics subscription to view.
Already a member?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services