Will the same happen here? More Investment in property!

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werner

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Interesting article here from the London Times.

http://www.timesonline.co.uk/tol/money/property_and_mortgages/article4916890.ece

"

From The Times

October 10, 2008


Frightened investors ‘pile into property’
Investors who have lost faith in the banking system are turning to property as a safe haven for their cash. Estate agents have identified a growth in interest from cash buyers, who want something tangible for their money rather than depositing it with banks they no longer trust. "



I usually find Ireland follows the U.K in most things.

Has anyone any knowledge of an upswing in property investment?
 
Do you really believe the advertorial guff you read in property supplement articles? Does anyone? I can't believe you swallowed this rubbish :(
 
When the market bottoms out, which may be anything from a year from now to a couple of years, it will be worth getting into property in very prime locations. This excludes everything in Ireland more or less; I'm talking about very good locations in central London or on the south coast of England, places where the population is increasing and where the demand prospects are good.
In my view, a declining population in the short term (returning emigrants plus Irish workers emigrating), coupled with gross over-supply, means that property investment in Ireland is a bad bet for a long time to come.
 
Moore McDowell in the Daft report made many good points:

"Reviewing the contents of the survey has reinforced a view that I have long held about buying houses. This is that despite what our parents always said, they are not a safe (i.e., low risk) investment. That means your decision to buy should be based not principally on what you might get if and when you sell it, but on how it will function as a home. To the extent that you buy a house as a lifetime savings vehicle, you should bear in mind that while on average it might be expected to increase in price in real terms by around 2-3% per annum over a long period, this return is subject to a really high variance, including a non-trivial risk of a negative real return. A house is exposed to similar risks to those afecting equities, as well as being very illiquid."

"An honest and rational consideration of housing as an asset would have led to the following conclusions.
  • First, expectations of returns to housing should be realistic, i.e. in the region of 2% to 3% per annum over a thirty year period. If that sounds small, remember that at 3% the real price of a house will double in twenty four years - with 3% inlation, the nominal price will double every twelve years.
  • Second, there are risks in acquiring a house as an investment. Unlike other assets it can only be sold to someone who wants to buy that house in that location. Changes in population, incomes, accessibility and fashion all affect what a particular house will fetch. Thus while houses on average may appreciate at 2-3% a year in real terms, there will be considerable variation around that trend. The actual return on the asset is uncertain.
  • Finally, a house is not a liquid asset. It is hard and costly to sell. The return to owning a house is only realised when you actually sell it. There are no insurance or forward markets to guarantee a future price, as exist for other assets."
And that's from a property website.
 
webtax said:
This should answer your question...

[broken link removed]
Click to expand...

Thanks - thats a very good link

I think its worth highlighting the paragraph most relevant to the OP's query.

Property pundits still believe it's worth buying a second home

But one thing I definitely wouldn't recommend is buying a second property.

That goes without saying, surely? But no, it seems that even amid the greatest financial crisis in a generation, the property pundits are still trying to stick their oar in for bricks and mortar. According to Anne Ashworth in The Times, some cash buyers have decided they'd rather stick their money into a dilapidated property and board it up for a few years than 'risk' it in a bank.

That's possibly the stupidest thing I've ever heard. Property is an extremely illiquid asset. It's also one of the most dependent on easy credit for its value. So if you buy property right now, no matter how cheap it looks, you are losing control of both when you can get your money back; and pretty much guaranteeing that your capital will depreciate as the market continues to weaken.
Click to expand...
 
I don't know, I have a parent who keeps telling me bricks and mortar - at least it's real so what if it's currently valueless, it will eventually be worth something and you can look at it, a company that goes bust in which one has shares = zero, similarly a deposit in a bank that goes caput, does a state guarantee really mean that, we live in strange times. Same parent tells me the French women have never trusted the Franc as one day it was worth something and the next day nothing............ who knows and so much for having cash. Maybe a block of gold in the garden would be a better bet. I cannot figure out anything in this current turmoil. Nothing makes any sense and what's worse the experts don't seem to have a clue either.
 
Bronte said:
Maybe a block of gold in the garden would be a better bet. I cannot figure out anything in this current turmoil. Nothing makes any sense and what's worse the experts don't seem to have a clue either.
Click to expand...


A block of gold would definitely be a safer haven for your cash than a plot of ground with a house on it at the moment.
 
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