UAE Central Bank warning on rental yields absurd as mortgage rates have also fallen to historic lows « ArabianMoney

UAE Central Bank warning on rental yields absurd as mortgage rates have also fallen to historic lows « ArabianMoney:



"UAE stocks tumbled today on an ill-judged report from the central bank that said historically low rental yields mean that house prices are rising too fast. In truth with ultra low interest rates, and UAE mortgage rates down from eight to 3.5 per cent in five years, this is exactly what you would expect to happen and it is happening everywhere else in the world too.



Basically rental yields tend to reflect the cost of borrowing money to own a unit of residential accomodation. As the cost of money falls so do rental yields. It is a simple matter of arbitrage between competing asset classes. Share dividend yields are also low while prices are at all-time highs in many global bourses for exactly the same reason."



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