I am not sure if there is a correlation between rentals and $psf, since rental is basically supply & demand and $psf is more STI & sentiment driven. In fact prices actually drop in Q308 from Q307 whilst rental went up. For newton area, max is around $5+ But I agree that rentals will not go anywhere these 2 years. Recoveries can be anything V, VL, W, Catepillar?
If rental is not going anywhere, then buyers now must believe in a V or W recovery for capital appreciation, right? On the other hand if it is a VL, the yield of 3% does not change for the buyer assuming rental can be maintained at current level. 3% yield is still better than the 1.5% interest from the bank loan in a VL scenario.