How do we value property.
Many hare suggesting that property should be valued as a multiple of the net annual rent.
Perhaps 10 to 20 times annual rent?
But what is a true economic rent.
What proportion of their income should people spend on rent?
Internationally it is in the region of 25-40% of income.
In France they have the “Indice de référence des loyers (IRL)” where annual rent increases are based on cost of living, cost of construction and cost of maintenance/improvement.
vosdroits.service-public.fr/part … 3723.xhtml
parisrental.com/real-estate- … r-icc.html
It’s a good question.
Another bit to add might be the propertion of net income that should be spent… seeing as after tax income is going to fall in the next few years.
Have to think about your second question but I’d suggest that valuing anything near 20 times earnings is far too high a multiple.
Interesting question and not just a rental question - it has been asked before here in the context of many posters noting that because a lot of people are locked into bubble property mortgages the country as a whole has “over-invested in habitation”. And a relatively poor quality of habitation too.