Things are not looking good, folks. Here are charts - you know I love charts, and I blame Britten's Simple Symphony for that withdrawal from words - that explain the trends:
Note the black arrow behind the red one on the right? Well, that shows how much faster rents are falling now relative to asking prices... Now, do the thinking here - if rents are falling faster than prices, what will happen to yields on rental property? Aha, collapse is the word you've been searching. And this has two interesting implications:
- There will be renewed pressure on asking prices; and
- The only reason rents are falling is (given that first time buyers are now opting almost exclusively to rent) because the foreigners are leaving the country... in droves... and that means that the oversupply of rental properties is not going to fall - it is only going to rise over the next few months (especially if the rest of the world starts picking up, while Cowen/Lenihan/Coughlan continue to tax this economy deeper and deeper into a recession).
So here are my forecasts for both markets
A Frolicsome Finale, indeed, is not in sight, unlike in Britten...