Future price of Irish properties

[ivuernis]

You should go back to the start of this thread the progression to the current state of ultra-bearishness is interesting to watch.

I think the graph plotting the increasing bearishness quotient might be a mirror to the increasing levels of prices and indebtedness we are getting into as a country.

Regardless I'm happy my job is going to be relatively unscathed. The company I work for does pretty much no business in Ireland.

I'm in a similar position but my job is subject to influences from external factors... I'm not discounting a slump there at the same time as it hits here, but I'm hoping it won't happen, at least not at the same time anyway.

 

[daveirl]

I'm in a similar position but my job is subject to influences from external factors... I'm not discounting a slump there at the same time as it hits here, but I'm hoping it won't happen, at least not at the same time anyway.

Yeah similar here I'd be in trouble if there is a global drop in consumer spending but if it's localised I'd be fine. Even if it's global hopefully things won't be too bad.

 

[walk2dewater]

In response to "what to do with your money", heres what I've sent posters who've pm'd me:
******************************************************
I am 55% in canadian debt (bonds of various durations and types), 25% in equities and about 20% in prec metals. The 25% in equities mainly in canadian tar sands energy, pipelines and utilities, metals, banks, some general exposure to Germany and Japan, and some international healthcare/pharma. Apart from the latter I have virtually nil exposure to the US currency or economy. Despite the run-up, gold might just be THE win-win asset at the moment. Im thinking of pushing % of gold to 30% or more. This time last year I was almost 100% in hard commodities and prec metals, not now.
*****************************************
The 55% bit in canadian bonds includes a far whack of just plain cash sitting in a money market fund. I am really grasping these days. In 15yrs+ of active investing, I really am not sure at all what is going to happen. I think cdn cash, very-near cdn cash and gold are looking like my preferred assets, even though I admit theres a certain contradiction there.

 

[ivuernis]

There will be carnage, this wont be a mild little recession and then back on to 5% GDP growth and 10% property price growth. A generation will come of age over the course of this next recession and they will be defined by it.

Do you think it will happen here in Ireland in isolation though? I'm inclined to think external factors will bring it down here in Ireland, rather than it being an isolated event here in Ireland. Of course, our credit/debt mania of recent years will ensure that when it does happen it will be felt particularly hard here.

People with no debt and lots of cash will have opportunities to make investment decisions of a lifetime.

I'm hoping to be in the debt-free/cash-in-hand situation within the next 3-6 months. I got burnt in the dot-com boom... nothing major but enough to hurt. I was young and not long out of college and got caught up in the mania a little bit and what seemed like a quick buck. Suffice as to say it was an expensive but valuable lesson learnt. If nothing else, it will be a change to go against the herd-mentality and see the reaction of people when I tell them I out of this property nonsense before I get burnt again. I suspect a few will tell me I'm mad but my instinct and reading of the situation tell me I'm making the right decision.

 

[daveirl]

I'm hoping to be in the debt-free/cash-in-hand situation within the next 3-6 months. I got burnt in the dot-com boom... nothing major but enough to hurt.

I was chatting to a guy on my break just there and we were discussing the 15 years of growth thing and he mentioned that he knows people in his local who are having a pissing contest with who owns the most houses but as he said it reminds him of the dotcom. He was down in his brokers and people without a clue were coming in looking to buy x or y because they read it in the paper. He decided to get out at that point! The parallels are everywhere between this and the dotcom mania!

 

[ivuernis]

equities mainly in canadian tar sands energy

A winner with current high prices no doubt, but a short-term drop in oil prices could hit their profitability as will the precarious situation with North American gas which is the main requirement to heat the tar sands. Hell, they've even considered building a dedicated nuclear plant to generate the electricity to heat the tar sands when they run out of gas to do it. Canada gets royally screwed by NAFTA agreement.

I'm thinking of pushing % of gold to 30% or more.

I'll definitely go into gold, maybe 5% as an insurance policy, my fear would be the gold price could go either way.

 

[Duplex]

Err, summary? Financial pages are bit like Centra sandwiches, hard to digest.

Well if you compare the performance of the general Dow index to Toll Bros. over two years; it sheds some light on the markets expectations for the construction sector in the States. I just posted that link as a thought provoker.

The economic climate is very cloudy at present. The Fed say they will continue tightening rates, however the yield curve is inverted on long dated Bonds. The Fed (today) stopped reporting M3 money supply data, and Burntcake (or whoever) has said previously that he will revert to the printing presses to prevent a deflationary recession in the States. Many commentators believe that the Fed is intervening in the stock and money markets in an attempt to micro manage the slowing US economy.

The US deficits are beginning to cause concern in Japan by far the biggest creditor nation, and what the Chinese will do (apart from securing 50% of the worlds manufacturing capacity) is anyone guess. Stock markets in the Middle East are yo-yoing at the merest hint of rising rates in Japan.

There is a lot of money sloshing about the world at present looking for a safe haven, is it gold, bonds, shares (which ones), is it real estate (no) or maybe it’s a ball in the Liberty Pyramid in Cork. Hey maybe NCB do have all the answers.

 

[walk2dewater]

Do you think it will happen here in Ireland in isolation though? I'm inclined to think external factors will bring it down here in Ireland, rather than it being an isolated event here in Ireland. Of course, our credit/debt mania of recent years will ensure that when it does happen it will be felt particularly hard here.



I'm hoping to be in the debt-free/cash-in-hand situation within the next 3-6 months. I got burnt in the dot-com boom... nothing major but enough to hurt. I was young and not long out of college and got caught up in the mania a little bit and what seemed like a quick buck. Suffice as to say it was an expensive but valuable lesson learnt. If nothing else, it will be a change to go against the herd-mentality and see the reaction of people when I tell them I out of this property nonsense before I get burnt again. I suspect a few will tell me I'm mad but my instinct and reading of the situation tell me I'm making the right decision.

If you makes you feel any better I lost US$15,000 in one day, one afternoon actually. And yes it was a tech stock....

 

[ivuernis]

I was chatting to a guy on my break just there and we were discussing the 15 years of growth thing and he mentioned that he knows people in his local who are having a pissing contest with who owns the most houses but as he said it reminds him of the dotcom. He was down in his brokers and people without a clue were coming in looking to buy x or y because they read it in the paper. He decided to get out at that point! The parallels are everywhere between this and the dotcom mania!

Reading things like this just re-affirms my decision. As you say we've been here before in the dot-com era but people just don't want to see the parallels. It's different this time/here. Sure it is! We're special in some unfathomable way aren't we!!

I won't feel a bit sorry for people with multiple properties if they get burnt but I will feel sorry for FTBs who've only recently bought. Most of them feel trapped between a rock and a hard place w.r.t. property prices. It's not an unreasonable aspiration to want to own a house to raise a family in but it shouldn't have to involve risking your financial future. The sad thing is these people will probably be hit the hardest.

 

[walk2dewater]

A winner with current high prices no doubt, but a short-term drop in oil prices could hit their profitability as will the precarious situation with North American gas which is the main requirement to heat the tar sands. Hell, they've even considered building a dedicated nuclear plant to generate the electricity to heat the tar sands when they run out of gas to do it. Canada gets royally screwed by NAFTA agreement.



I'll definitely go into gold, maybe 5% as an insurance policy, my fear would be the gold price could go either way.

Well I'm not exactly delighted with my portfolio either. And yes, 30% or more invested in prec metals would have seemed madness to me only a few years ago. I think the odds are for a 'muddle through' scenario globally so I'm hoping I'll 'muddle through' also.

 

[ivuernis]

Many commentators believe that the Fed is intervening in the stock and money markets in an attempt to micro manage the slowing US economy.

My knowledge on this is vague at best, but isn't that one of the reasons given as to why the Fed is ceasing publication of the M3 numbers as the M3 minus M2 figure goes some way to showing how much "repurchase agreements" the Fed is putting into the system and thus influencing the markets?

 

[bearishbull]

wait till the chinese fully float their currency ,it will rise and we will be importing inflation from there and our currencies may be negatively affected by strengthening yuan.wonder when will international investors start buying the yuan as a reserve currency....

 

[conor_mc]

Walkdewater or anybody
What assets would act as a hedge if property implodes? I do not want to short stocks or own any time limited financial asset.
Thanks
TYoung

Been thinking about this one, and I stress that I'm not a learned investor by any stretch of the imagination but....

If the hypothesis is that rising interest rates are a major risk to the Irish propert market, would it not make sense to invest in the market which is driving the interest rate rises, i.e the recovering German economy?

 

[dam099]

In response to "what to do with your money", heres what I've sent posters who've pm'd me:
******************************************************
I am 55% in canadian debt (bonds of various durations and types), 25% in equities and about 20% in prec metals. The 25% in equities mainly in canadian tar sands energy, pipelines and utilities, metals, banks, some general exposure to Germany and Japan, and some international healthcare/pharma. Apart from the latter I have virtually nil exposure to the US currency or economy. Despite the run-up, gold might just be THE win-win asset at the moment. Im thinking of pushing % of gold to 30% or more. This time last year I was almost 100% in hard commodities and prec metals, not now.
*****************************************
The 55% bit in canadian bonds includes a far whack of just plain cash sitting in a money market fund. I am really grasping these days. In 15yrs+ of active investing, I really am not sure at all what is going to happen. I think cdn cash, very-near cdn cash and gold are looking like my preferred assets, even though I admit theres a certain contradiction there.

For someone who is so down on the risks of property and a major recession your own portfolio is not exactly low risk itself.

a) Very high concentration in one market (Canadian)
b) FX risk of concentration in CAD (unless you live in Canada?)
c) Prec metals are doing very well right now but gold for example underperformed significantly in the last few decades (I suppose thats also a case for considering it undervalued). Some of the other precious metals derive a significant amount of their demand from tech manufacturing and could be vulnerable in a slowdown.
d) Canada is in large part a commodity based economy and your other investments include equities in commodity companies and precious metal so you are highly exposed to commodities, demand for which could decline in a major recession.

Not saying your strategy is definitely wrong, only time will tell, but its definitely risky.

 

[dam099]

.wonder when will international investors start buying the yuan as a reserve currency....

Not until they are sure the Chinese are done playing silly buggers with their FX rates which could be quite some time i.e they will need a track record of fully floating for a while.

 

[bearishbull]

Been thinking about this one, and I stress that I'm not a learned investor by any stretch of the imagination but....

If the hypothesis is that rising interest rates are a major risk to the Irish propert market, would it not make sense to invest in the market which is driving the interest rate rises, i.e the recovering German economy?

diversified investment in german bluechips that have significant sales abroad would be worthwhile,even during the supposed bad patch in european economy german companies such as siemans basf linde sap and many other performed well as they export huge amounts of high value proucts from germany and plants around the world so you get exposure to growth in asia and around world,plus german equities are quoted in euro so theres no currency risk on them.

 

[tyoung]

Off topic I know
I'm holding a fair amount of cash. In stocks i've bought healthcare,foods and some technology as I think they're relatively interest rate insensitive. I've cut my exposure to emerging markets. I think interest rates are going to 5.5% in the US(the average for the 90's) and over 4% in europe so cash seems to make sense.
I think bonds are overpriced. I share concerns about the dollar but I don't know enough about the Canadian dollar etc to venture into the currency markets.
I own the Japan ETF though it's had a good run last year. Buying German stocks means buying into the US/China boom which I think is fragile.
I've followed the discussions on gold but (sadly)never bought any. I think gold will really come into it's own when central banks start to cut interest rates in response to a global slowdown.
Regards

 

[walk2dewater]

For someone who is so down on the risks of property and a major recession your own portfolio is not exactly low risk itself.

a) Very high concentration in one market (Canadian)
b) FX risk of concentration in CAD (unless you live in Canada?)
c) Prec metals are doing very well right now but gold for example underperformed significantly in the last few decades (I suppose thats also a case for considering it undervalued). Some of the other precious metals derive a significant amount of their demand from tech manufacturing and could be vulnerable in a slowdown.
d) Canada is in large part a commodity based economy and your other investments include equities in commodity companies and precious metal so you are highly exposed to commodities, demand for which could decline in a major recession.

Not saying your strategy is definitely wrong, only time will tell, but its definitely risky.

To yesterday I'm up ~70% in about 18 months

Bragging aside though Im not actually adding to my positions at the minute, right now just keeping them and/or moving to cash and gold. But long-term (5yrs?), my love of all things Canadian stems from:

• Conservative estimates put 333b barrels of oil in the canadian tar sands, vs. say 285b in all of Saudi. The issue is tar sands oil is profitable only at oil prices north of US$35/bbl. And 333b is very conservative, no one has a clue
• India and China AND the USA are competing amongst themselves for Canadian dollars. There is a wall rupees, yuans and US greebbacks heading to Canada, not just for oil, but for nickel, copper, zinc, gold, uranium-- you name any hard or soft commodity (besides tropical fruit!) and Canada HAS it in spades
• I think the Can$ is going to par with the US$ within min 2yrs and thereafter heading to 1.1
• The women in Vancouver are stunning

Anyway, werent we talking about house prices?

 

[onekeano]

• Conservative estimates put 333b barrels of oil in the canadian tar sands, vs. say 285b in all of Saudi. The issue is tar sands oil is profitable only at oil prices north of US$35/bbl. And 333b is very conservative, no one has a clue

• 
  
  W2W - can you thro some more light on this? Are you recommending a particular stock?
  
  Roy

 

[Neffa]

So there seems to be a consensus here that the amateur investor holding a few or many properties is the market segment most at risk when rates rise further and/or economic activity wobbles. I realise highly-geared FTB's are at risk too but the effect is dramatically magnified when many properties are involved.

Does anyone know what %age of the housing stock they own, or what the average number owned is?