Report Interest rates will never go up... in House prices and the economy Posted October 29, 2020 For me the topic of this thread is literally the million pound question ... Around here (outer west London) at the moment a typical property which costs £1800 p.c.m to rent is £650,000 to buy. That is, the property is priced at 30 years gross rent (1800 x 12 x 30 = 648,000). Or conversely, the annual gross rent is 3.3% of the price. It feels to me like that in a less certain world "30 years gross rent" could conceivably go back down to a more historic norm of "15 years" (gross return of 6.6%). Which would be a 50% crash in price down from £650,000 to £325,000. And yet at the same time, it also feels conceivable that in a new negative rate low growth world ... Investors could be prepared to take a gross income of just 2.0% per year. Which would put the price up from £650,000 to £1,000,000 !