Current public sentiment towards the housing market?

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gidxlo3

The market sets the value not the seller. As prices are set at the margin the latest comparable sale is the open market value of comparable properties. The energy squeeze will divert resources (money) from non productive fixed assets to productive investments e.g. alternative energy. Its quite true that many people will not sell at the market price, in expectation that prices will rise in the future, however I have yet to read a reasoned argument as to why or how this will support current valuations.

The UK economy is a basket case with falling productivity, static incomes growth, a rising trade deficit, rising unemployment and rising bankruptcies and debt defaults, I think that they've drunk the debt tap dry.
 
gidxl03 said:
'bearishbull' your prediction may of course be true. However Q2 2006 shows a fairly sustainable increase of about 4 to 5% and so small IR increases of 0.5% will not be enough to cause a major upset.
- UK pop is ~15 times ours, but they are building only 2x as many houses
- average HP/Salary is about 8
- very high immigration levels
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If theres a shortage of housing then why are yields so low relative to interest rates over there? Also prices are ten times average salary 200k:20k , interest rates are much higher there so servicing a mortgage costs more and theres no sign of lower rates any time soon, their unemployment is at 6 year high and rising.the london price rises early in the year distort national figures. todays rate rise may turn public sentiment more bearish.
 
walk2dewater said:
Sounds like you were lucky, right time, right place. Unlike the current crop of FTBs who are subsidising the early retirement lifestyles of their elders via the property pyramid.
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Luck had nothing to do with it and the time span is 20 years planning to retire early. I don't know of anyone who could afford to retire early solely based on the price a FTB could afford to pay for the family home (if this is what you're referring to). In my case we have two pensions (one an albatross which we're still trying to get rid of) and a third, if you count the state pension.

When it comes to the PPR, although it is leveraged, this is for a miniscule amount in terms of what it would be valued on the market. However, I have always been of the opinion that a house is only worth what someone is willing to pay for it and would never dream of speculating with the family home.

Not everyone invests for the same reason, some invest with the idea of selling up at retirement and living on the profits. Some keep their properties so that rental income will give them a wage and yes, some jumped on the bandwagon with the hope of making spectacular gains. Because of this, the outcome will be different for the individual. Even if house prices/rental incomes fall, it won't mean that investors sell wholesale. If that was the case, why haven't they been selling in droves over the last couple of years when rental income has dropped significantly? Capital gain alone, is only worth it if you can afford to pay the mortgage.

I have and always will look after my own retirement and lifestyle and don't believe for one minute that it's at anyone else's expense.
 
gidxl03 said:
So 'whathome', say I have 600K to invest after selling property bought in 1996. What do you suggest I do with this cash to protect it from inflation?

WHAT IF for example the US solves its debt problem by creating trillions of FIAT dollars (thereby devaluing China's foreign exchange of 1 trillion USD)and our friends at the ECB want to keep the euro pegged with the dollar. ECB will need to reduce interest rates and so property will continue to rise sharply while my 600K in a Bond is worth less and less every day (and the government tax it!).
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Invest it in well diversified funds , over the long run equities outperform all asset classes, companies will always exist and make profits despite challenges like inflation and "peak oil".
 
bearishbull said:
Invest it in well diversified funds , over the long run equities outperform all asset classes, companies will always exist and make profits despite challenges like inflation and "peak oil".
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Agree
 
gidxl03 said:
'whathome', post 1161 is out of context! The context is: an investor who is thinking about selling: forgoing 50K a year of easy money and 12K in rent to instead pay 1% to an auctioneer, an few K to get house painted & decorated, hassle of selling furniture. And, after having timed the market, buy in again and pay stamp duty of about 7%, more solicitors etc.

And after all that you don't have an answer to what to do with the money. Perhaps now you see the other side of the fence !
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Why not just buy low - it will be so much easier.

With gross yield on property at around 3%, cash earns more in the bank without the risk. Also - the Euro is not, never has been and never will be pegged with the US dollar.

This thread is about property sentiment so I'm not going to bore you with what I would do with the money beyond saying - I wouldn't touch Irish property.
 
Just thinking about what the Americans will do to address their deficits that stand at about $12 trillion. They may seek to monetarise the debt, (print more dollars) but this will cause hyper inflation, the possible collapse of the dollar and the end of America as the soul superpower. Talk about a rock and a hard place.


http://bethemedia.typepad.com/photos/uncategorized/deficits.jpg

Nice chart tracking the deficit from the 1960's.
 
I love the term "Soft Landing" which has been frequently used in the press lately. I was on a flight back from Madrid recently - the plane descended slowly for 30,000 feet before we experienced a soft landing!
 
liteweight said:
Luck had nothing to do with it and the time span is 20 years planning to retire early.
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If you bought into the Irish property bubble early count yourself lucky. But spare some sympathy for the poor saps buying now.

liteweight said:
However, I have always been of the opinion that a house is only worth what someone is willing to pay for it .
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Exactly. Debt on the other hand is all due and payable, with interest. Again, spare some sympathy for the poor saps buying now.

liteweight said:
Even if house prices/rental incomes fall, it won't mean that investors sell wholesale. If that was the case, why haven't they been selling in droves over the last couple of years when rental income has dropped significantly? Capital gain alone, is only worth it if you can afford to pay the mortgage.
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Indeed why have "investors" continued to pile into property? I think it might have to something to do with "prices always go up in the long-term", "it's a pension", "Can't lose with property", "have someone else pay your mortgage" and other such pearls of apparent wisdom.

liteweight said:
I have and always will look after my own retirement and lifestyle and don't believe for one minute that it's at anyone else's expense.
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The reality is that the saps buying at current prices are supporting the value of your property(s). For now. That is, until we run out of saps.
 
[whathome] One thing I can say for sure, it's never easy to "just by low". E.g. when in 1996 I invested heavily, people told me I was stark raving mad. Only in hindsight was it wise. The gain is much greater than I expected so I do count myself lucky (but fully realise that it is still only on paper!) Also, of course the euro is not hard pegged to the dollar but since the EU is a net exporter to the US, the exchange rate is an important factor. E.g. Those of work in US multinationals based in Ireland know that their salaries are calculated in $.

The question about what to do with the money is intrinsically linked to the thread topic of propery sentiment. There are many amateur investors who got lucky and just don't know how to invest the profit. E.g. The Black monday crashes (25% in one day). You need to convince amateur investors like me that the stock market will be a better bet in the long run.

[bearishbull, Duplex] Stock markets have done well as economies have expanded. Oil is essential for this to happen. The trend of the last 60 years of strong stock market growth may not continue as oil reaches 200$ a barrel. At 80$ a barrel we can still fly to Italy for 50 euro. It is still dirt cheap!
 
gidxl03 said:
[whathome] One thing I can say for sure, it's never easy to "just by low". E.g. when in 1996 I invested heavily, people told me I was stark raving mad. Only in hindsight was it wise. The gain is much greater than I expected so I do count myself lucky (but fully realise that it is still only on paper!)
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I understand what you're saying gidx. I've bought low or lowish by making sure I don't buy high. Echoing W2DW, I really feel sorry for people trying to buy their first property at the moment but I think if they hold off, they will be able to buy at lower prices.
 
gidxl03 said:
The question about what to do with the money is intrinsically linked to the thread topic of propery sentiment. There are many amature investors who got lucky and just don't know how to invest the profit. E.g. The Black monday crashes (25% in one day). You need to convince amature investors like me that the stock market will be a better bet in the long run.
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Nobody really cares where you invest your money because (to the best of my knowledge) nobody here has a vested interest in you putting your money somewhere. So by all means continue to take financial advice from REAs. However, historical data will show that stocks outperform all other asset classes in the longterm (10+ years). However, a well diversified portfolio is encouraged. As a store of wealth, property is terrible despite the tax advantages to holding it. For one it requires leverage and also housing is an illiquid market so it is not always possible to sell when you want.
 
Duplex said:
Just thinking about what the Americans will do to address their deficits that stand at about $12 trillion. They may seek to monetarise the debt, (print more dollars) but this will cause hyper inflation, the possible collapse of the dollar and the end of America as the soul superpower. Talk about a rock and a hard place.


http://bethemedia.typepad.com/photos/uncategorized/deficits.jpg

Nice chart tracking the deficit from the 1960's.
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Its only $40k per citizen ,hardly armagedon stuff. lets try keep on topic folks.
 
RTE News at 6pm and 9pm had well balanced reports on the ECB rise today. Lots of warnings about increasing debt and the squeeze on recent home buyers. These reports really do affect sentiment IMO.
 
Irish people by and large are totally ignorant about investing. We don't learn it in school, and its not passed down from family. Sorry, that's the grim reality and it's a shame. Until we learn how, and are motivated and encouraged to, obtain, grow and preserve wealth we are destined to remain at the mercy of those that do.
 
walk2dewater said:
Irish people by and large are totally ignorant about investing. We don't learn it in school, and its not passed down from family. Sorry, that's the grim reality and it's a shame. Until we learn how, and are motivated and encouraged to, obtain, grow and preserve wealth we are destined to remain at the mercy of those that do.
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It still shocks me that it's not considered a necessary subject for the school curriculum. I guess if you go back a couple of decades then teaching children where to invest their future earnings would have seemed like a sick joke but it is essential we introduce it now.
 
one question-why should property prices keep rising at their current rates when there is no shortage of houses. we can and do build more of them each year -mainly because people seem willing to pay more and more for them.i consider that (imho)the very definition of a bubble.
question 2.
what usually happens to bubbles?
all this talk of what ifs reminds me of a joke i heard years ago-
doctor.well mr smith, no doubt about it -you've been poisoned.
mr smith. good grief-what is it?
doctor. we wont know that until the autopsy.
 
[room305] I get the feeling that a lot of contributors would like to see people like me selling up. So maybe they do care where it is invested!

As for taking advice from REA's, well I wouldn't be here if it was that simple!

Note that I am only addressing one important subtopic: why don't 199X investors sell up when the profits are so high? I have much smypathy for FTBs but can't offer them any advice.

If energy supply wasn't a problem then I would sell property and buy shares. But it is a problem and with the uncertainty of FIAT money, I'm not convinced that selling up is the best bet.

I agree that I haven't a clue about how to invest this windfall. So I would very much like to see arguments about why peak-oil won't reverse the trend of stock market growth. Perhaps someone with answers would like to start a new thread? Or even just some URLs to get me started.
 
whathome said:
RTE News at 6pm and 9pm had well balanced reports on the ECB rise today. Lots of warnings about increasing debt and the squeeze on recent home buyers. These reports really do affect sentiment IMO.
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I was quite suprised that no EA or bullish commentator was on to give a 'balanced' view of the news. I am still inclined to agree with some of the earlier posts that some of the saps buying now won't pay any attention to this increase....
 
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