Barfoot’s Gets Numbers Confused

Barfoot & Thompson have  made a “boo-boo” in their latest release.

They try to show that because house prices have increased, the gross return to landlords is falling as rents fail to keep up with values and costs.

Their error is that they have taken the average sale price of  houses across all suburbs and then compared that to average rents in the same suburbs.

This does not compute.

Most houses are sold to owner occupiers, and it is only the cheaper houses that are usually sold to investor/ landlords.

If you want to make  comparisons, then you must take the average sale price of  properties sold to investors and then do the maths.

While it is true that some “expensive” houses are sold to investors, the majority are at the cheaper end.

Read the story here:

Somebody in Barfoots should be taken out and beaten on the soles of their feet with a  loaded stick.

The average rental property value is way way less than $677,000.

The vast majority of rental properties are in the $350-$450K region and the average rental around $350-$450 per week = a gross return of  approx 5.2%.

It is true that the dearer the house the higher the rent, but it does not go up in a straight line because of the “grunt”  factor  i.e. the ability of people to pay more whatever the value of the property.

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