I reckon the RBS share price should smash buy-to-let in 2019. These days I almost feel like I’m in an AA meeting when I admit to it, but I’m a buy-to-let investor. Or, at least, I was a couple of decades ago and I still have a rental property — I did own two, but demand and returns were falling so I sold one and cleared the mortgage. When I got into the market, it seemed like a good idea for two reasons. At least I bought the house when prices were lower, but I wouldn’t dream of entering the buy-to-let market today — essentially because rents have stagnated while house prices have soared. As my Fool colleague Edward Sheldon has pointed out, average yields are estimated at around 3.6% right now, and that fits with my current experience. But to get that 3.6% requires work. The latest 2019 forecast by the Royal Institution of Chartered Surveyors (RICS) suggests housing demand will continue in its current somewhat sluggish fashion. But the worst RICS is forecasting seems to be a static market in 2019 as growth slows. What I’m seeing is far more fear built in to the RBS share price than is actually justified, and self-reinforcing downward pressure. When investors expect fear to push share prices down, they’ll sell just to try to beat the drop, regardless of whether they think the fears are justified.
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