Long term interest rates are a key driver of property prices, and a recent report by CBRE in Sept 2018 show a close relationship between real interest rates and property yields.
In the report, the authors claim that concerns about rising real and nominal long-term interest rates are overblown.
Increase in rates will likely be below the consensus of economic forecasters and they will level off well below pre-GFC levels.
Noting a downward trend in property yields for the US since the mid-1990’s, the fall has been closely liked to the fall in real interest rates.
CBRE makes a note that the long downward trend in yields is not just a product of QE.
The picture is the same in the UK , though the relationship is a little complicated by the monetary turbulence of the 1970’s. …