Bertie gives investment advice

colc1 said:
I think most economists would agree with that section on the cepr website from what I've heard from some I know
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Well the rate of inflation in Irish house prices has now reached it's highest since 2000 according to the latest TSB/ERSI Index released today. So is Bertie right about the fabled soft landing?




http://irish-property-bubble.blogspot.com/
 
Duplex said:
Well the rate of inflation in Irish house prices has now reached it's highest since 2000 according to the latest TSB/ERSI Index released today. So is Bertie right about the fabled soft landing?




http://irish-property-bubble.blogspot.com/
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I doubt it looking at the way things are going. Who is going to buy all these houses they're building after a while? Unless everyone has an investment property or multiple investment properties or the economic migrants all settle here for good (which I doubt they'd want to with all the high prices, never mind they have family back home). When there is a slow down in building surely the many foreign workers working in construction are going to generally go back home and with EU funds the 'new' EU countries will prosper the way Ireland has. What happens then? There is talk the ECB might increase rates in May and what if they increase them again. The attraction of buying investment properties will then lose its appeal especially if the number of potential tenants go 'home' wherever that may be (i.e. the 'new' countries) and we'll have to 'put into' the EU for once in the future too.
 
askalot said:
Through allowing the central bank set interest rates at a level suitable for the Irish economy but then the Irish government handed that away to the ECB.
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Er, didn't we have a referendum on that one.

You can't blame the govt for everything, y'know.
 
If (when) the property market goes flat, where nobody is buying new houses, one thing is for definate. The developers at the FF tent during the Galway races will be using their substantial lobbying power to get the first time buyers' reintroduced.
 
I see that Bertie has explained the rationale behind his original comments in reply to Trevor Sargent ...

Want does anyone think of Berties comments in the dail the other day (in reply to Trevor Sargent) that there isn't a danger of a shock in the housing market because loans are only 100 billion whereas the value of property in Ireland is 500 billion.
 
I'd like to know what he bases the valuation on? The loan figure is a definite figure, the valuation is (by definition) an estimate.
 
Glenbhoy said:
I'd like to know what he bases the valuation on? The loan figure is a definite figure, the valuation is (by definition) an estimate.
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Even if the figure is true - and it does sound about right - give or take a couple of hundred billion - it still makes no sense that because the notional value of property is greater then the actual loan value it will prevent a shock.

Anyone who remembers the quote from Japan in the late 1980's will know that:
"it was a matter of pride that the land around the Imperial Palace in Tokyo was at one point worth more than California"

I am sure that the land around the imperial palace was far more valuable than the loans on the equivalent property (and ditto for the whole of Japan) - but it didn't prevent a shock
 
Mervyn King (Governor of the Bank of England) recently commented that "only the debt you have on your home is real". In other words, the value of your house is only true if you sell up. Other than that, the only certainty is the debt owned on it.

I think the interesting figure is the explosive growth in mortgage debt which is accelerating far faster than house prices. So the gap is closing and in the event of a crash, the gap could close dramatically.
 
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