House Price v.s Rent

Tonight, I want to share an interesting relationship I learn between house price vs rent. In the area I live in, the house price has increased dramatically over the last three years. In this year, house price have been stable. In the same time, rent is pretty flat , if not declining over last three year. But this year, the rent has increased quite a significant amount. I find that this is also true in another area that I invested real estate in. House price and rent has a inverse relationship. When price increase intitally, there will be more people interested to buy house, this reduce the number of renter in the market. When the price has increased a significant level, house become less affordable and lesser buyer are interested or qualify. When it happens , the renter increase and drive up the market's rental value . Therefore, the rent is always lag the house price. As a investor in real estate, this is quite a good news. This means that the rent we're able to collect is likely to increase in the next few years down the road since house price in most area tends to become stable over next few years. This will certainly help our cash flow position.