The Investment Property Databank has reported the lowest monthly return from the property sector for 12 years.
Average total returns were 0.2% in July, and retail and industrial prices fell in July by 0.6% and 0.3% respectively. Only the office market bucked the trend with a rise of 0.3%.
The figures, based on 4,300 properties with a total value £58.5bn, seem to confirm the view that commercial property investors will no longer pay such high prices.
Average yields have dropped from 5.5% in mid-2005 to 4.56%. Five-year swap rates have gove from 4.5% to 6.1.
There is no longer a positive gap between the two.
IPD’s consensus forecast for capital growth in 2007 has fallen from 4% to 3.2% since May.