I have been looking at a possible relocation to SE England and was aware that purchase prices down there were roughly similar to Belfast. I then made the very naive assumption that rent would thus be in some broad sense, comparable. Not a bit of it. It appears that SE England will produce rents in excess of 75% of IO mortgage. Look at belfast and one is fortunate to get 40%! So, that being the case, if a crash is to be expected in SE England then what should we be expecting in NI. One could argue that rents here are too low, but ultimately the population could not get close to affording it were rents to rise to make up that ratio. Ultimately it seems to me that prices have no only gone bananas in terms of purchasing, but people buying to let have totally lost all sight of the finishing post. This example makes it even more clear to me that NI prices have to crash big time else it simply will result in people renting. Since they cannot afford more on rent, the rental costs cannot be forced upwards.

So today I am even more bearish on NI. There is no way we can maintain the present situation or even something close to it. Either the market will be forced to crop by 50% or more (a number I have been unwilling to accept previously) else we need some totally unforseen factor to make purchasing desireable even in the face of ridiculous costs compared to rent. Short of finding oil or gold, I cannot think what could possibly achieve this.

the salaries/pay rates for SE England are so much higher than here so unless pay rates here rocket (unlikely) then rent rates will remain fairly static - Possibly increased in line with inflation etc... but probably not increased that much.

Agreed - but I see no good reason for pay to increase in any significant way.

I live in Scotland and the yield where i live is over 7%.
Rents have also risen faster than house prices in the last 2 years.

Belfast's rents are low and may rise in due course - but the current yields are just pathetic.

I just wonder how this can happen. If rent rises, as a reasonably high NI earner, I can only afford a lesser property. That means that somewhere below me, there will be someone who cant afford to rent any property. That then falls into my fave 'supply and demand' arguement. The people who cannot afford do not actually contribute to a real demand. So, given that purchasing is totally stupid at this point, rising rents mean that a smaller and smaller number of people can afford it and the overall demand drops. Dropping demand is not normally something that supports rising prices!

So what happens to the poor bums who can no longer afford anything? They cant earn anymore... does the government now have to step in to stop homelessness becoming an issue? It is shocking to think that the greed of investors could theoretically lead to largescale homelessness!

good post, it's a bit scary when you really break it down to your basic supply/demand scenario

The government subsidize housing for the poor here in NI.

At some point you might expect the UK government to stop paying so much - they certainly won't be agreeing to massive above inflation increases in DHSS support - they don't have the money to waste.

I don't know what an economist would forecast here - but i expect rents to increase as demand increases.

yes demand can increase....but when the rents are pushed up too, people can't afford them and the BTL flats/houses will lie empty pushing down prices till they are filled.

Another slant I've thought about is the DHSS and paying rents for unemployed. If rents become too high for most working people to pay, the unemployed will still be able to get theirs paid by our tax money. how would you feel knowing that you are working and not having somewhere to live against someone lying on their **** doing nothing but getting their house paid for them....you would be better off unemployed