How long will low yields be with us, not just in property

It seems like so many parts of the economy have low yields: rents, shares (yield & CG) , cash, wages and even the price of goods with this weeks CPI. I'd really hate to a self funded retiree at the moment!

It seems to me that until interest rates start rising, and by a bit at that, this low yield mentality is ingrained throughout the economy.

It could be said that even the recent CG in Sydney has underwhelmed vs past booms. The old 20% profit on developments seems to have gone out the window to.

This is just my perception but would be interested in some alternate views. This seems to have started with the fear produced by the GFC but instead of a bounce back it's just becoming more wide spread, I wouldn't be surprised to see it last 5 or 10 years

 

You could buy ASX top 10 companies last I looked with 8% yield + franking credits.

With low interest rates there are plenty of properties out there with positive cashflow too.

Anything can be said, doesn't mean it is true. I don't know too many people underwhelmed by the performance of their Sydney properties over the past 5 years.

I think you need to look for opportunity instead of excuses.

 

You're a hard marker Hodor. Glad you where never my one of my teachers!!!

I wasn't actually saying there's any lack of opportunity just a seemingly ever lower yielding financial environment we are working in. With the lower inflation, yields can be lower and as investors we get the same result.

Was comparing %'s in Sydney VS the early 00's, every one says around 50% growth for recent boom vs 200% + in 00's. A Great but again a lower yield.

Trust me I've jumped on some very good opportunities over the last 2 years so don't worry to much about me

If your a saver of money your yield just dropped another 25bp go the RBA.

 

There might have been properties that jumped 200%, median prices didn't make 100% in Sydney from the figures I've seen.

Good to hear you have managed to do well.

I won't speculate on the future of house prices and what the might do.

 

There are higher yields about, just depends what you're into.
Less likely to find it in Sydney, more likely in places that haven't boomed recently.

 

Trailing yields..
They are only high because the share price continues to slide.. 16% capital loss for an 8% dividend yay..

 

lol yep that's what I was thinking 8% yield on asx......source?

 

ANZ was the company at the time of writing my comments and its price has made a gain since, hence trailing yield has dropped. ANZ has a dividend cut this year (80cps vs 86cps for same period last year) even with this cut the gross yield will be around 10% for the coming 12 months based on the price at time of writing, I would still not consider it a "low yield" investment which was the purpose of my example.

For the long term income investor I don't believe there is any lack of opportunity and a capital loss just represents a chance to get more cheap.

Obviously you should DYOR I am certainly no expert and this was all just an example.

 

Since my original post the yields on savings have reduced and the yields on labour (wages) and goods(inflation) continue to not grow as they used to. Property yields are there lowest I've ever heard of.

My point wasn't that there aren't any good yields out there, there's just seems to be an acceptance that lower yields are the new normal, with the lower inflation the impacts in theory aren't as great at least.

 

low yields are just part and parcel of the central bank easing measures that just "kick the can down the road"

wait till we get to negative interest rates, lol...

 

Seems we're in for a period of stagflation. We might actually be relieved to see higher interst rates when the time comes - though must admit I'm still enjoying the low rates.
Pay hasn't increased for 2 years, rents for longer.

 

Was chatting to my retired father in law today he's thinking rates down to 1% by years end. He hates what in does to his income and worries it will make retirees jump into risky investments.

 

The Federal Reserve will hike in July after the Brexit outcome (assuming no resulting market havoc) The aus cash rate must always be at a premium to the U.S cash rate, due to our Current Account Deficit and the prospect of losing AAA in the near term.

 

Must is a strong word in todays volatile economy. It looks like staying in euro for uk is a forgone conclusion with the current sentiment.

Fed hike in june is also likely.

As usa raises rates, i reckon the carry trade will just unwind further and big capital outflows soon from aus.

Theres no way our economy would survive a rate rise at this stage.

 

well our gov is getting poorer every passing day and with the global economy in the doldrums, it doesn't take a genius to see where we are heading.

To help with the massive budget deficits coming, the RBA can only drop rates to negative to try and keep inflation and GDP growth positive, otherwise tax and other gov income will just shrink.

However we all know without strict fiscal discipline on spending, that wont work in the long run. just look at Europe and Japan. And Canberra's still thinking of spending big on submarines? So long our fleet can "turn back the boats" i'm a happy camper.

 

Buying low yield in a low interest rate environment = risky. When it unwinds you'll be in big trouble.

 

What do you mean by unwinds?

 

When rate rebounds. And there's many reasons it could. A lot of people think if we have a recession, rates will fall so it'll all be safe. Look at Brazil.