Investors in residential property mainly derive returns from:

• A. Rental income
• B. Increases in house prices
• C. Interest income
• D. Tax credits

Answer: (B)

The main driver of returns from residential property is capital appreciation—the rise in house prices over time. While rental income provides a steady cash flow and contributes to overall return, the potential gain from selling at a higher price typically outweighs the annual rental yield, especially in markets with rising values. Interest income isn’t generated by the property itself, and tax credits do not represent a cash return from the investment. So, the primary way investors build wealth in residential property is through increases in property values.