# Shares V Property



## Culchie (11 Aug 2005)

I keep reading on websites such as this, and boards.ie a typical question such as

"Should I invest in a second home, or should I invest in overseas property"?

The most frequent answer from the moderators, or 'veteran advisors' of the boards generally goes along the lines of

"Shares have consistently shown a better return over a period of 5 years or more" or something along those lines.....and generally advise against (and some ridicule) people for thinking about investing in the property market..... and lo betide anyone cheeky enough to suggest buying a property in Bulgaria or Croatia etc... 

OK, well I'm open to correction, but it would appear to me that property has outperformed shares over the last 5/7/10 years or so?

Can property prices in the Eastern Europe not rise as they did in the Western Europe?


----------



## CoffeeBrew (11 Aug 2005)

An article in the SBPost a little while back suggested that 2005 could ( I say could 'cause it ain't over yet !) be the first year in 10 years that Irish property _underperforms_ certain Irish equity funds.

There has been an average 14pc annual rise in property prices during the boom of 1995-2003. 

But house price growth is now the lowest on record (for the PTSB/ESRI index) and is now rising at about 5pc a year. According to the Indo most analysts do not foresee another spurt. In fact things could get even worse from 2005 on out depending on a number of factors.


----------



## Culchie (11 Aug 2005)

So that's 10 years ....so should these 'experts' not be saying that property has outperformed shares for the last decade ...... no they don't.


They continuously advise against and often rdicule people investing in property.

10 years is 1/3 of my life so far, 1/5 of my working life. 

It is not an insignificant about of time.


----------



## CoffeeBrew (11 Aug 2005)

You raise a another good point. Young people in their late 20's early 30's have seen property make enormous gains year after year
throughout their adult life.

It's easy to understand how this fosters a belief that property is an investment asset that only goes up and can justify 
becoming over-mortgaged and indebted to the hilt.

I don't have a crystal ball but IMHO there appears to be an increasing number of factors that would suggest caution might be in
order !


----------



## ClubMan (11 Aug 2005)

Culchie said:
			
		

> They continuously advise against and often rdicule people investing in property.


Can you quote examples of anybody advising against or ridiculing property investments per se on this board?


----------



## Culchie (11 Aug 2005)

ah now, surely I don't have to go back through threads quoting people, it's a common theme.


Fallejuh came up quite recently, same as Tommy continuous jibes at people purchasing overseas.

Even the askaboutmoney guide says " Overseas property is not a good idea "


I'd prefer a discussion on the main point of my question.


----------



## ClubMan (11 Aug 2005)

Culchie said:
			
		

> ah now, surely I don't have to go back through threads quoting people, it's a common theme.


That's my point - I don't believe that it is a common theme at all and, in the absence of evidence, I don't see why people should assume this either.



> Fallejuh came up quite recently, same as Tommy continuous jibes at people purchasing overseas.


_Tommy _who? I Know that many contributors have pointed out some of the potential pitfalls with (foreign and domestic) property investments usually in the context of people asking about what sorts of issues they need to consider. I would not consider such contributions as jibes, ridiculing the idea or necessarily advice against doing so. When considering any investment all of the pros and cons must be considered in order to arrive at a prudent and balanced conclusion. Just give me one example of where anybody on this board ever claimed that property per se was a better/worse investment than shares (or anything else) without qualifying their comments?



> Even the askaboutmoney guide says " Overseas property is not a good idea "



Where?



> I'd prefer a discussion on the main point of my question.


I'm merely challenging part of the premise on which your main question is based.


----------



## Culchie (11 Aug 2005)

[font=Verdana, Arial, Helvetica, sans-serif]*Taken from the top 10 tips*[/font]
[font=Verdana, Arial, Helvetica, sans-serif][/font] 
[font=Verdana, Arial, Helvetica, sans-serif][/font] 
[font=Verdana, Arial, Helvetica, sans-serif]*A foreign holiday home is not a good investment*
If you can afford to buy a holiday home abroad go right ahead and enjoy it. But don't justify it on the grounds that it is an investment. It is a high risk, low return gamble.[/font]


----------



## ClubMan (11 Aug 2005)

Don't forget what the introduction says:


> [font=Verdana, Arial, Helvetica, sans-serif]This book reflects the opinions and biases of Brendan Burgess founder and administrator of Askaboutmoney. Brendan is a Chartered Accountant and a long time campaigner on consumer issues. Where a contributor to Askaboutmoney makes a well reasoned argument against some of the points made by Brendan, it is included in the book in a separate panel, clearly labeled as The Counter View.



Now's your chance to make a well reasoned counter view for inclusion as a rebuttal to the tip above.
[/font]


----------



## Culchie (11 Aug 2005)

Well, we'll revert to my original post.


OK, well I'm open to correction, but it would appear to me that property has outperformed shares over the last 5/7/10 years or so?

10 years is 1/3 of my life so far, 1/5 of my working life. 

Can property prices in the Eastern Europe not rise as they did in the Western Europe?

So that's 10 years ....so should these 'experts' not be saying that property has outperformed shares for the last decade ...... no they don't.


It is not an insignificant about of time.


----------



## ClubMan (11 Aug 2005)

Culchie said:
			
		

> OK, well I'm open to correction, but it would appear to me that property has outperformed shares over the last 5/7/10 years or so?


What shares? What property? What geographic regions? What sectors? What indices? What sort of property (commercial, residential)? What performance (capital appreciation/growth, dividend/rental income etc.)? Etc. etc...



> Can property prices in the Eastern Europe not rise as they did in the Western Europe?


Maybe. Maybe not. Who knows? Nobody can predict the future and past performance is no guide to future returns.


----------



## Brendan Burgess (11 Aug 2005)

Culchie

When you make serious and incorrect points, you cannot just say that you want to discuss one point of your argument. 

You claim that the AAM guide says the following:

" Overseas property is not a good idea "

When you are asked where it says this, you find this quote:

[font=Verdana, Arial, Helvetica, sans-serif]


> *A foreign holiday home is not a good investment*
> If you can afford to buy a holiday home abroad go right ahead and enjoy it. But don't justify it on the grounds that it is an investment. It is a high risk, low return gamble.



That is a very different statement from what you originally claim the AAM Guide said. When you make a serious and incorrect allegation, you should withdraw it and apologise. 

You have some chance then of getting people who have been investing through stockmarket and property rises and falls engaging in discussion with you. And maybe you would learn something. However, I suspect from the tone of your posts that you have no interest in learning anything.

Brendan


[/font]


----------



## techman (12 Aug 2005)

I think lads yee are being a bit hard on Culchie.

I don't think he made such a 'serious and incorrect allegation".

I think his point about overseas property not being a good idea is from an investment point of view, which in fairness, the guide states.

As to his point of Property v Shares, his point was a general one. We could be here all day comparing residential property v blue-chips, commercial v. small cap stocks etc.

I think he has made a valid point!


----------



## Culchie (15 Aug 2005)

Brendan said:
			
		

> Culchie
> 
> When you make serious and incorrect points, you cannot just say that you want to discuss one point of your argument.
> 
> ...


 
Well I think you are being pedantic and over defensive.
I didn't quote word for word what the guide said, maybe I should have, but I certainly did not use false or misleading words either ......"Overseas property is not a good idea" ...... and " A foreign holiday home is not a good investment" are hardly worlds apart are they?

Thank you Techman for your support, and I would still like some comment on my point of the post instead of having to be askaboutmoney proof in my exact wording .... I think my question is a straight forward one...... or is it that I'm challenging a view that is not allowed to be challenged?


----------



## deecide (17 Aug 2005)

I'm slightly reluctant to reply to this thread in case I choose the wrong word or comment which will be seized upon so I should use Brendans phrase that these are my "opinions and biases" and like Culchie i am "open to correction". I agree with techman and took Culchie's point as a general one. I think that after the pop in the IT bubble and 9/11 , the equity side had to step up the marketing ,while property sales took on a life of their own. Maybe if the property market slows or falls then we'll hear mortgage providers / estate agents telling us how property has outperformed everything etc. Brendan , I think that was a bit harsh with regard to the "tone" of Culchie's posts and too be honest I thought some of Clubmans responses were more toned.


----------



## ClubMan (17 Aug 2005)

deecide said:
			
		

> and too be honest I thought some of Clubmans responses were more toned.


What specifically did you not like about the tone of my posts? I simply challenged _Culchie _to justify his initial accusations that veteran contributors and moderators on this board _"continuously advise against and often rdicule people investing in property" _and he has so far failed to make a reasonable case to back these assertions up in my opinion. My other contributions were simply challenging some of his other assertions in relation to the markets. What's the problem with that?


----------



## Brendan Burgess (17 Aug 2005)

ClubMan

I took it from deecide that "toned" was used in a positive manner, but maybe I am wrong.

But anyway, you should not waste time on this. Everyone is very happy to give the benefit of their knowledge and experience to people who genuinely want to debate the subject matter which is important. But we are under no obligation to do so when wild assertions are made which they won't support.

It's appears to be a troll if you look at the subsequent "or is it that I'm challenging a view that is not allowed to be challenged?" rubbish from culchie.

Brendan


----------



## deecide (18 Aug 2005)

Yep Brendan, you hit the nail on the head there. Was referring to the challenging/questioning tone which both Culchie and Clubman used and I didn't have a problem with either of them. Just thought the "no interest in learning anything" part was a bit harsh.


----------



## ClubMan (18 Aug 2005)

deecide said:
			
		

> Yep Brendan, you hit the nail on the head there. Was referring to the challenging/questioning tone which both Culchie and Clubman used and I didn't have a problem with either of them.


Fair enough. Apologies for assuming that you were reprimanding me for something earlier so!


----------



## Sadmak (18 Aug 2005)

One thing that i feel people dont always take into account when comparing the above is that when you invest in a property is that it always involves a large amount of money.

A simplified example - i have 60k cash
lets say I buy an apartment of the plans today for 300k and i put down a deposit of 30k
This time next year it is ready and i immediately sell it. lets say it goes up by 7%
and i get 321k. for arguments sake fees are 10k.  i make 11k clear profit
With the other 30k i buy shares and they rise by 10%.  before tax i make 3k after my year.  a difference of 8k

So while shares out perform property in terms of percentages - its not exactly comparing like with like.

Am i missing something??


----------



## ClubMan (18 Aug 2005)

Another key difference obvious from the example above is that property investments lend themselves to gearing (i.e. borrowing to invest and only having to put up a fraction of the initial investment cost up front) moreso that most equity based investments. Of itself this is neither necessarily a good or a bad thing but brings with it its own advantages and disadvantages/potential rewards and risks etc.


----------



## efm (18 Aug 2005)

Clubman,

I think your point about gearing raises an interesting question - why are credit institutions more likely to lend someone money to invest in property but not in shares / equities?

Would there be a perception amongst lenders that property is a "safer" asset for investment? If so, is this just a perception or is it based on any actual facts?

Would banks be more amenable to someone looking to borrow for investment in a property fund?

Do these actions by the lending institutions feed into peoples general (mis)perception? that property is a better and / or safer bet ?

Apologies to all if I am taking this off topic

efm


----------

