Capital Growth

What is capital growth?

Capital growth refers to the increase in the value of an asset over time. This term is commonly used in the context of investments, such as real estate or stocks. When the market value of an asset rises, it experiences capital growth. 

Difference between capital growth and rental yield 

Capital growth is in regards to your investment becoming more valuable over time, with growth being realised when the property becomes worth more than what you paid. 

On the flip side, rental yield refers to the money you make from renting out the property to a tenant. It's a percentage that tells you how good your property is at making income compared to its value. Investors usually want a mix of both – a property that not only grows in value (capital growth) but also brings in some steady rental income. 

What is considered ‘good’ capital growth for a property? 

While your property may not grow in value each year, a growth rate between 6-10% is considered stable. However, this figure can change depending on factors such as the location of your property, economic factors and the type of property it is.