General (main property discussion here) - Over-valued or under-valued?

I currently believe that certain areas of the UK are fundamentally over-valued while others are under-valued.

Looking on this site some properties at 3.5% yield just appear over-valued. This is not the owners fault, the market is to blame. Meanwhile properties at >6.5% seem potentially undervalued?

What are others thoughts on this: - the concept of over- or under-valued? - areas / regions?

Julian

I think the important calculation is expected return rather than yield Julian.

Some areas appear to have higher yields in general - but they may be far less desireable places to live in - and hence far harder to source good tenants for. Taking void rates into account may well decrease these yields.

That said I still think you are right, that when there is a discrepancy in expected returns, long term the yields must converge.

My opinion anyway!

John