Believe it or not yes. For the average investor in shares, dollar cost averaging (ignoring market sentiment) has been shown to be one of the most consistent ways of making money. The stats show that on average investors who try and judge market timing do worse than those who don't - e.g. the market after the 87 crash recovered quickly, even while sentiment was poor.
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I think it's already been well established that the ISE is highly dependant on the construction industry and banks. Should there be a bad outlook for these sectors it would wipe a lot off the stocks. Not surprising that Goodbody's would produce a scary looking report like this (23% of GDP in Ireland is construction related) and then still try to conclude that it's all looking good for the future.
Completely agree - incomes to price are way out of whack.
IMO the FTBS / investors are the key to the market - if they pull up those currently in starter homes will not be able to sell and trade up for years. This will hit values right up the chain. What we could see in Ireland IMO is a locked up market with a dramatic fall off in transactions. Imagine if there is a crash suggesting to the bank manager that you want to rent existing to buy that family house up the chain. Thats before the stamp duty distortion re cost of moving.
Although if stamp duty collapses then either corporation tax has to double or income tax rise by circa 20% based on yesterdays dept of finance numbers.
its difficult to remain balanced on this soft landing tight wire
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And our GDP is skewed abnormally high due to multinational activity. If you express as a % of GNP the figure gets even worse !
Thing is that for timed market trading you've got to be consistently correct to beat buy-and-hold. With your PPR, you've only got to be correct once.
I wouldn't recommend STR just to make a fast buck, but if you intend to trade up anyway it's a calculated risk whereby the transaction costs can be ignored because you're expecting to pay them anyway.
hmmm, not sure about that now (regarding property) - Out of interest , what you you do in my situation then?
bearishbull
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http://www.rte.ie/business/2006/1004/housing.html
According to goodbodies we are building 21 homes per 1000 people and will exceed euro average in 2 and a half years. wonder if all the empty houses are being included?
According to goodbodies we are building 21 homes per 1000 people and will exceed euro average in 2 and a half years. wonder if all the empty houses are being included?
Doin' the maths.
For most countries, GDP = GNP but for Ireland GDP = GNP * 1.2
Therefore if construction is 25% of GDP, construction must be 30% ( 25 * 1.2) of GNP.
Is this not just a case of the construction industry trying to talk up the market though? It seems like they are trying to assure any shareholders that the future's looking good and they will have lots of business going forward.
I wonder why Sisks recently decided to diversify and get into the healthcare industry, if things are looking so good for construction right now?
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Sounds like a lot of eggs in the one basket!
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StoppedClock
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IMO the European average is rendered completely irrelevant because of the massive number of unoccupied homes now. Just because something is the European average does not mean it is a target to aim for or even a comparative measure.
Norwegians consume on average just 6 liters of alcohol per person per annum, the European average is closer to 10, would you invest in a Norwegian brewer who proposed upping their output for the domestic market because it was below the European average, even while all the shelves were fully (over) stocked??
PS Please feel free to come up with a better analogy, I’m sure there is an absolute Peach that can be summed up in a single pithy statement suitable for bulls with extremely short attention spans.
I did the maths for this a while back, we already have way more rooms per 1000 people than the euro average, they just have more properties per 1000. I guess this comes from our historically larger families.
The numbers:
Ireland has the 2nd largest houses on average, with 5.3 rooms per dewelling. The euro average is 4.32 rooms per dwelling.
So if we have 410 dewllings per 1,000 people, at 5.3 rooms per dwelling we have, 410*5.3= 2173 rooms per 1,000 people
European average is:465 * 4.32 = 2008.8 rooms per 1,000 people,
So we already have way more rooms than the euro average!
On average European dwellings are larger than in Ireland, 90 sqm vs 88.3 sqm. but I dont' think building more tiny dwellings is going to help that figure much.
source of dwelling size data: http://www.finfacts.com/irelandbusinessnews/publish/article_10005314.shtml
So good news for future buyers then!
Sounds like another reason for them to "wait-and-see" what the next 88,000 properties next year will bring. There might even be a few in desirable areas and at affordable prices.
bearishbull
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Yes but person per household is decreasing due to less people getting married young, more divorces etc, i take your point but dont think its as simple as that but i do think we will have an oversupply soon (within a few years)
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StoppedClock
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Do you believe we don't have an oversupply now?
I pure number terms we probably do have an oversupply but as bearishbull said it's not as simple as that due to demographics but also in the type of housing we are oversupplied in and other types we are undersupplied in... and more importantly where these are or are not located.
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StoppedClock
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Good point, we certainly have an oversupply of small 1 and 2 bed apartments in crap locations with poor services and an undersupply of homes suitable for raising a family, however using this line of reasoning I fail to see how we will have an oversupply soon (within a few years).
true, you don't know if there are big houses with few poeple in them or if they are all crammed with renters. But it does suggest that there are more than enough rooms to house the people we have numberswise at least.
Also I'm sure the same demographic arguments would apply to large parts of europe as well?
Well there are a few things that could cause oversupply
1. Investors bailing out of the market (275,000 empty properties etc, many more rented out but sellable if they wanted to.., very likely, especially now we are enjoying our "soft landing" and there few capital appreciation gains to be had)
2. Continued excessive building (likely? or another while at least)
3. Less immigrents/immigrents going home (if economy turns, quite likely in the construction sector)
One of options 2 or 3 are very likely to happen. Either Construction continues and immigrent keep coming or Construction stops and a lot of the immigrents no longer have jobs. You could say these construciton workers could find jobs in other construction besides residential housing but I'm not sure if the government is going to ramp up public construction projects just as stamp duty takes are coming down. And we only need so many office blocks.
I'm not sure how we can avoid oversupply to be honest. The question is how will we deal with it?
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