Funding concerns for Irish investors

INVESTORS in Irish residential property continue to face a significant funding gap despite a rapid increase in rent yields to 3.8% as average mortgage rates hit 4.8%, according to Goodbody Stockbrokers.

Goodbody economist Dermot O’Leary said that despite rents growing at an annual pace of 12% and house price inflation now in negative territory, rental yields are expected to continue their ascent over the coming quarters to 3.9% by the end of 2007.

“Although uncertainty around interest rates has increased of late, our core scenario of ECB rates peaking at 4.5% remains. In this scenario, it would take four years for the rental yield to match the cost of capital.