The research note by Lehman Brothers reports yields of 2.1% inIreland, 3.4% in Britain and 1.9% in Australia. In Italy, yieldsare at 3.9%, which is toward the bottom of their historical range.In the US the current net yield is the lowest recorded since1976.

"The historical relationship between housing prices and rentalyields suggest that very low yields have predictive power in termsof house prices," according to the research note. "In the case ofthe UK, current rental yields have coincided with peaks in housingprice inflation in both the early 1980s and the early 1990s." Butthe analyst added that the current upward trend in theinternational interest rate cycle is unlikely to trigger a globalhousing market crash.

In contrast, commercial property yields are less stretched andLehman believes that the current out-performance of the sectorstill has further to go. The note points to prime office yields inmajor European cities reflecting an unweighted average of 6.1% andin most cities they are out-performing local equity markets. Lehmanestimates that since 2000, the European commercial property markethas out-performed equities by 27%.