Assets are underpriced

Bank of England, London, originally uploaded by hanneorla.

According to Sir Mervyn King, Governor of the Bank of England, assets are underpriced already.

This is interesting. The house next door is up for sale for £389,000. It has been let for about £1200 a month, around £12,000 a year net. That makes the yield just over 3%. You can get 6% by putting your money in a building society. Northern Rock pays 6.15%. So the house next door is not underpriced.

So where are these underpriced assets?

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