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SteelBlue05
Guest
walk2dewater said:
Its like listening to drunk conversations in a pub. Are you not the person projecting interest rates of 8% by end of 2007?
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Its like listening to drunk conversations in a pub. Are you not the person projecting interest rates of 8% by end of 2007?
CelloPoint
Registered User
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SteelBlue05 said:Its like listening to drunk conversations in a pub. Are you not the person projecting interest rates of 8% by end of 2007?
But you're not in a pub and this is indeed a deadly serious topic. The fact is that the more people there are out there having this conversation (average joe having a pub chat or not), the worse the sentiment gets, the more the market gets spooked, the sooner the effect on the property market.
In another post someone mentioned the possible male/female divide on this issue. To me there seems to be a Dublin/rest-of-country divide on this issue. As far as I can see my Dub friends are bullish and the rest are bearish. Does this reflect anyone elses experience here?
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SteelBlue05
Guest
CelloPoint said:
Yes but does anyone really know what they are talking about? You cannot predict things like this and while its ok to discuss the topic this thread is becoming farcical with all the throw away statements that are not based on any reasoning, and other statements where people most have a crystal ball.
I took the view (in that other thread) that it's worth looking at how open to financial risk people are. Prices in Dublin are, in the main, significantly higher than they are in the rest of the country, hence, on average, people are outlaying more money. I'll translate that - yes, it bears more relation to my reality than a split down male/female lines.shnaek said:
That being said, I've seen more than a few people suggest that Dublin will not be as badly impacted by a property correction because Dublin is short of property, or words to that effect. I'm not altogether convinced by that. I get the impression that prices in Dublin rose further and faster than the rest of the country. I think they have further to fall when or if the time comes.
That being said, someone is going to pop up and talk about demographics and profiles of available properties, so I will qualify that by adding at most risk is the vast swathes of totally inappropriate and badly designed one and two bedroomed apartments. But I would be stunned if the rest of the property types in the city avoided some sort of collateral damage.
Well, I am only giving my opinion. And yes some of it needs a pinch of salt to digest. The market may be heading for a big downturn. FTB are getting priced out of the market. When these guys can't get on the ladder, the whole thing grinds to a halt. When 'investors' see (on a quarterly basis, retrospectively) that the expect capital appreciation does not materalise, this will effect the "fundamentals" you hear economists talk about. These figures could be released at the start of the next selling season in August. However they will provide a caveat, saying that it was an unusally slow off season.SteelBlue05 said:
".......Investments may rise as well as fall"
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yawha
Guest
CapitalCCC said:
Then those books which are outdated should be pulled off the shelves,but the're not,this guy sells books now which applied to markets 10 years ago.
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Guest126
Guest
Totally untrue - he talks about puts and calls as well as property, his books do not say go buy property.
His books say "buy assets" do not waste money on luxuries.
Good advice I think, particularly nowadays when people are so keen to throw money around.
His books say "buy assets" do not waste money on luxuries.
Good advice I think, particularly nowadays when people are so keen to throw money around.
Here's my reasoning.
Ten year Euro bond rates are at 4%, I calculate an equated yield on Irish residential property at 3-4% in excess of the Ten Year Bond to reflect sector risk. The risk weighting is my take on factors such as
1. Falling real rental incomes
2. Substantial supply of empty properties
3. Market reliance on 'transient tenant' sector
4. Serviced land supply equivalent to 350,000 new units
5. Unsustainable rate of debt accumulation.
5. Irish economy's reliance on American MNC for export earnings.
6. The probable impact of American trade and current account deficits on the American economy and the dollar.
7. Rising Euro interest rates.
8. Heavy Irish exposure to risky overseas property bubbles.
9. Poor financial literacy amongst many market participants.
10. The deflationary impact globalisation will have on incomes growth in western economies in coming decades.
11. Mortgage fraud and unethical business practices in the lending and property sectors.
So my considered take on the extent of over valuation for Irish housing is in the region of 50%. Worth noting that prices have fallen in Tokyo by 70% over the past decade and a half, by 50% in many other bubble markets in the past.
Ten year Euro bond rates are at 4%, I calculate an equated yield on Irish residential property at 3-4% in excess of the Ten Year Bond to reflect sector risk. The risk weighting is my take on factors such as
1. Falling real rental incomes
2. Substantial supply of empty properties
3. Market reliance on 'transient tenant' sector
4. Serviced land supply equivalent to 350,000 new units
5. Unsustainable rate of debt accumulation.
5. Irish economy's reliance on American MNC for export earnings.
6. The probable impact of American trade and current account deficits on the American economy and the dollar.
7. Rising Euro interest rates.
8. Heavy Irish exposure to risky overseas property bubbles.
9. Poor financial literacy amongst many market participants.
10. The deflationary impact globalisation will have on incomes growth in western economies in coming decades.
11. Mortgage fraud and unethical business practices in the lending and property sectors.
So my considered take on the extent of over valuation for Irish housing is in the region of 50%. Worth noting that prices have fallen in Tokyo by 70% over the past decade and a half, by 50% in many other bubble markets in the past.
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walk2dewater
Guest
SteelBlue05 said:
There is a lot of reasoning going on here. [and there is a paucity of reasoning in Ireland in general IMHO]. If you can't stand the heat....
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walk2dewater
Guest
Duplex said:
My vote for the numero uno problemo. No one seems to know how, or for that matter WANT, to think for themselves.
I believe Duplex you coined it "Ah-sureism"
walk2dewater said:
Bubble psychology as can be witnessed in other speculative markets in Bulgaria, Spain, Florida, Dubai, Cyprus, Hungary etc. where many Irish investors are embroiled. These are low rent, high void, intangible yield places with p poor resale markets, Bubble markets, reliant on an endless supply of greater fools.
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Contrarian
Guest
When everyone thinks the same, then there is'nt alot of thinking going on....
SteelBlue05 said:
We are not discussing a rational market or people behaving in any kind of a logical manner, so how else are supposed to treat the topic?
In a bubble market nobody can predict when the crash will occur, just that it will occur.
Bubbles always last longer than people expect and that's why people get sucked in, they begin to think that maybe it isn't a bubble after all.
Agree with u Duplex and the greater the bubble,the harder the fall
A couple of factors u missed on your list
1-High cost of living in Ireland
2-Average earnings between $30-$40k multiple of 8-9 on average house prices
3-New housing stock projected at 100k for 2006
4-Vast majority of inward migration from new EU accession countries
5-Household size reduced from 3.1 in 2002 to 2.5 now
And the argument for increase prices is what???
A couple of factors u missed on your list
1-High cost of living in Ireland
2-Average earnings between $30-$40k multiple of 8-9 on average house prices
3-New housing stock projected at 100k for 2006
4-Vast majority of inward migration from new EU accession countries
5-Household size reduced from 3.1 in 2002 to 2.5 now
And the argument for increase prices is what???
Duplex said:
I've already mentioned here before the frightening story of a friend who believed that an IO mortgage meant you effectively paid the interest for the loan and then the capital. So he was looking forward to the IO component of his mortgage running out so that IR rises would no longer be a problem!
In general, people seem quite ignorant of even what their current interest rates are let alone what way they are headed.
A 50% correction in real terms seems about right to me.
However, I think some people here are mistakenly of the impression that there will be a crash one day which in turn presents a fantastic smash-and-grab buying opportunity for wily investors.
Be aware, when this thing goes south it will be an incredibly long, painful, drawn out affair.
CelloPoint
Registered User
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Duplex said:
Excellent analysis of the current situation.
In response to SteelBlue05,
SteelBlue05 said:
I would say, that nobody is on here being absolutist about the future (it's impossible to be). But, as Duplex points out, there is a thing called risk which balances any potential benefits in every investment scenario. They are listed pretty well, in order of likelyhood, above. The risk associated with Irish property is massive when you compare the guaranteed rate of return associated with bank deposits (currently 5% with AIB). There are even larger rates at other banks with large sums of money (i.e. house price sums of money).
31,500 hits on this thread alone gives you some indication as to how nervous people are becoming. Well done Miju for starting such an gripping topic! I would hardly describe this thread as being 'farcical'. It would farcical not to take action to counteract the imminent market threat.
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yawha
Guest
CapitalCCC said:
Investing, is all about timing,buy low sell high etc,no where does he give hints or insights on what to look out for or signals which show which way any market is going.
Anyone who reads the market reports would have known many parts of the US property market was in decline for the last year,hardly insightful information.
I bought one of his books about a year ago,one of my worst investments ever.
On the point of financial literacy, I remember back in 1996, a woman at work saying she had just bought her first house and she was delighted, however she had heard that many people were predicting that the price of property would rise dramatically in Ireland, she was worried that her mortgage was going to go up with the increase in value of her house!!!
Basic finance should be mandatory in Secondary schools - it is the most important topic that effects absolutely everyone.
I think that property prices will keep going up until everyone has had a chance to cash in their profits - then there will be no fools..property prices will then gently drop down so everyone who cashed in can buy a nicer, bigger house at a cheaper price....because if that doesnt happen it will be so unfair.
Basic finance should be mandatory in Secondary schools - it is the most important topic that effects absolutely everyone.
I think that property prices will keep going up until everyone has had a chance to cash in their profits - then there will be no fools..property prices will then gently drop down so everyone who cashed in can buy a nicer, bigger house at a cheaper price....because if that doesnt happen it will be so unfair.
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