Just before the turn of the Millennium, residential investment markets had made significant adjustments to a lower inflation and lower interest rate global environment, but there was more to come.

In this memorable article Yolande Barnes correctly anticipates the convergence to lower residential yields that was around the corner, highlighting the boost to returns for long term investors.

Interview with Jim Ward

Key facts:

Job title: Director

Specialisation: Applied Research Consultancy

Years at Savills: 24

About Jim: In 1999, I had been Head of Rural Research at Savills for 9 years. I became a director of the Residential Research team in 2004, allowing me to explore the relationship between housing policy and market response.

Q How have residential yields moved since 1999?

A In December 2001 the average gross yield on UK residential investment portfolios stood at 8.6% on investment value, according to our stock weighted analysis. By December 2013 it had fallen to 6.8%, driven by higher growth in capital values than rents.

Q How did investors fare?

A The average residential investment made in December 2000 had generated a total investment return of 165% by December 2013, a return of 7.8% per annum over the 13 years. Income was an important part of that return.

Q Now interest rates are set to increase over the next five years, does residential look a good investment?

A We expect strong investment returns to be driven by rental growth in higher value markets and income return in lower value markets, all supported by push and pull factors into demand for the PRS.

Click the below image to enlarge

Taken from
25 Years of Savills Residential Research (1989 - 2014)