Price-to-Rent Ratio

Price-to-rent ratio is property purchase price divided by annual rent, indicating whether buying or renting is more economical and market valuation levels.


CalculationFormula
Price-to-rent ratioPurchase price / Annual rent
Inverse calculationAnnual rent / Purchase price = gross yield
Higher ratioExpensive to buy relative to rent
Lower ratioFavorable for buyers, high yield
InterpretationMarket Signal
Ratio under 15Strong buy signal, high yields
Ratio 15 to 20Balanced market
Ratio 20 to 25Slight rent advantage
Ratio above 25Expensive, consider renting
Dubai typical range16 to 20

Related Terms

Gross YieldRental RateMarket ValuationInterest Rate Risk

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