Future price of Irish properties

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ClubMan said:
I do agree that some of the guff posted about the property markets is largely meaningless though.
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Very true however i for one do find reading differing opinions on the future of Irish property quite interesting, perhaps more so to see how people choose to justify their own decisions (and I don't exclude myself from that).

These threads have appeared periodically over the last few years with varying degrees of debate but what is interesting is the distinct increase in the sentiment that the "good times are over" and even that "bursting of the bubble is inevitable". More surprisingly such sentiments are even beginning to appear in the mainstream media with vested interests doing their best to talk down property gains going forward and talking up the infamous "soft landing".

Personally I don't believe in timing markets either and am currently investigating my own portfolio which will indeed be a 'buy and hold' strategy. However when investigating what to invest in it makes sense to me to avoid a market where gains have been massive in the past and evidence going forward for better gains is shakey at best. Maybe I'm just conservative but especially considering the levereged nature of most property investments the risk/reward maths just don't work out for me anymore.

{Btw (and maybe I'm just being thick about this) could someone explain the difference between equities and shares to me, the terms seem to be very similar in some of the literature I'm reading.}
 
Eurofan said:
{Btw (and maybe I'm just being thick about this) could someone explain the difference between equities and shares to me, the terms seem to be very similar in some of the literature I'm reading.}
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Equities and shares are the same thing really. That used to confuse me too.
 
The International Monetary Fund approximates that Irish house prices are 20% overvalued at current interest rates.

http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1489698&issue_id=13148
"Experts sound alert on house price fall"

House prices have risen faster in Ireland than any other developed economy, doubling in the last six years, the report finds.

Although it is difficult to measure the right value, the IMF thinks an increase of around 80pc is all that could have been justified by lower interest rates and rising incomes.
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Meanwhile euro zone inflation spikes to 2.6% increasing the odds for interest rates to go up.

http://www.rte.ie/business/2005/1018/eurozone.html

A few more cracks appearing in the foundation ?
 
ClubMan said:
Equities and shares are the same thing really. That used to confuse me too.
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Thanks for that! One article in particular kept switching the terms with seemingly no reason.
 
Perhaps it's just the fact that I haven't had enough caffeine this morning but here is another article on property where the headline is bullish on property but the article doesn't appear to back it up..

http://www.unison.ie/business/stories.php3?ca=80&si=1490154

The headline is "Property still remains top investors' first choice"

Now as you read the article you quickly encounter:

one in three in the AB socio stratum - a segment including senior managers, professionals

and owners of medium/larger businesses - intended to invest in property in the next 18 months.
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Ok, there's the first hint. What this is saying is the vast majority of senior investors - 66% - will not be investing in property in the next 18 months.

Then read further below and you find:

the survey found 60pc of them still favour low risk guaranteed products.
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Perhaps I'm missing something here but wouldn't a more appropriate headline be "Most top investors to avoid property investment"
 
You could interpret it this way:

33% of those surveyed would invest in property
Of the remaining 67%:
- 30% would invest in tracker bonds
- 30% would "invest" in high yield deposits
- 7% would invest in equities

So, property would still be the first choice (most popular) on an investment-by-investment comparison.

The interpretation that most investors would avoid propery is of course an equally valid interpretation, but the title of the article appears to be factually correct. If 60% of those who favoured lower risk guaranteed products all favoured tracker bonds, then the tiltle would be incorrect, as it would be tracker bonds that would be the top choice.
 
Thanks for that.

The interpretation that most investors would avoid propery is of course an equally valid interpretation
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I would see this more as a direct fact from the survey as opposed to an interpretation. The survey states directly that only 33% will invest in property. Therefore 66% will not. Not much interpretation required there!

Rather property being the top investment is the interpretation because it depends on a choice to group all types of property (residential ,commercial, domestic, EU , foreign etc) into a catch-all "property" category but to break out other categories like guaranteed products into different types.

Anyway let each take what they may from this article but to me the head does not fit the body and the real news is that at a time when it is so easy to borrow for property for ordinary souls (even easier for the well-heeled) and at a time of record construction with such a large choice of property investment types that the vast majority of top-layer investors will be giving property a miss.
 
Clubman,

Thanks for the clarification and explanation. Btw, glad to see I'm not the only one who finds all these property threads a bit repetitious.

I hear what you're saying about the differences between the equity and property markets, but still think there's an element of double-think/double-standards involved.

If someone asks "Should I invest in property?" the debate inevitably focuses on the current level of the market and whether or not it is overvalued. If someone says they have a few quid and they want to invest it somewhere, the advice is often to put it into equities or an equity-linked product (and to adopt a buy-and-hold strategy). That's fair enough, but what I find strange is that - in complete contrast to property discussions - no-one ever gets into a debate about whether or not now is a good time to put money into an equity-based investment (and if they do they get ridiculed for attempting to 'time the market').

I don't have any axe to grind here, I just find it a little odd.
 
Sherpa said:
That's fair enough, but what I find strange is that - in complete contrast to property discussions - no-one ever gets into a debate about whether or not now is a good time to put money into an equity-based investment
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I don't think that's true. I'm sure that we have had discussions about timing both markets and have had a diverse range of views on both. I do agree that the property market threads tend to go on and on and generate more heat than light in my opinion since any discussion of predicting the future is ultimately fruitless in any context.

(and if they do they get ridiculed for attempting to 'time the market').
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I don't think that anybody has ever been "ridiculed" for talking about timing any market. Obviously some people (such as myself) don't believe that this is a meaningful strategy but simply stating that (even in the shape of calling it a "mug's game") hardly constitutes ridicule.
 
I'm writing to the Oxford Dictionary to have the spelling word 'Wolf' changes to 'Crash'. :)
 
RTE July 2005:
The Central Bank has forecast that the Irish economy will grow by 5.5% this year.


RTE October 2005:
The Central Bank has cut its figure 2005 growth to 4.25%


That's quite a revision isn't it. ? Must be a lot of headscratching going on.

Also the Central Bank seems somewhat surprised as to why the IMF is recommending that money be taken out of
the Irish economy.

Hmmm why would the IMF suggest such a thing ?

(Hint: it begins with PROP- and ends with -BBLE) :D
 
CoffeeBrew said:
RTE July 2005:
The Central Bank has forecast that the Irish economy will grow by 5.5% this year.


RTE October 2005:
The Central Bank has cut its figure 2005 growth to 4.25%


That's quite a revision isn't it. ? Must be a lot of headscratching going on.

Also the Central Bank seems somewhat surprised as to why the IMF is recommending that money be taken out of
the Irish economy.

Hmmm why would the IMF suggest such a thing ?

(Hint: it begins with PROP- and ends with -BBLE) :D
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Irish Times article today reports the Central Bank has cut its growth forecast from 5.5% to 4.25% and warns employment growth will be considerably lower in 2006 as activity in construction sector slows.

Surely it is not pure conjecture or speculation to observe and note the perspectives of a wide range of interested parties - including potential property purchasers and landlords - and make one's own mind up? Monitoring the pulse of an economy isn't a matter of 'belief' or 'scepticism'; it is making a working hypothesis which informs one's actions.
 
That is some revision from the central is such a short space of time. I wonder what will drive the economy forward when the bubble ends. We can't just keep building new shopping centres and office blocks that have a large likelihood of remaining empty for large amounts of time
 
I've seen this a lot and it's understandable that some property owners in Ireland should be more focused on the present. They've already bought. They rode prices up and as sure as property-price-cycles they'll ride prices down. The ride down might not nearly be as much fun but there's nothing they can do about that so why even conjecture about the future.

However for someone considering pouring their life savings and future earnings into some little brick rectangle that has quadrupled in value in the past few years.....well, ignoring risk is a fool's game.

And heaven knows it's getting easier and easier to see the risks.
 
Hi Sonar! In the 1950's very few people 'owned' their homes, and you had to be quite well off and have a better-than-average job to get a mortgage as the cost of borrowing money was (relative to incomes) high.

However the whole culture of housing and community was also different. As young people married and started families of their own they settled very near mother and siblings and in many cases lived in the family home in the early years. Mortgages were over decades and people were definitely not thinking about the resale value of a house if/when they got a deposit together and settled down to repaying the mortgage over a lifetime.

Individual expectations and standards - as well as the financial institutions and 'the market' - have changed as well. 'The market' is not something 'out there' which is nasty and depriving hardworking folk of opportunities, it is a social mechanism created by people and their needs and desires! unfortunately greed and stupidity (as well as generosity and creativity) go into that.
 
Hey Bacchus,

Interesting insight. Just wondering where you got the info. that German property prices are expected to go down 30%. I'm planning to invest there, and I understand since 1990 they are going steadily down, and have dropped ~10% since then.

Would be great if you could let me know,
Thanks,
Darragh.
 
I bough a town site 25 years ago and built a small bungalow on it ( straight out of the book) and later on built an extension. Kids are more or less reared now so while I have no urgent desire to move nontheless I no longer have to reside close to schools/Churches/Shopping centres etc.I was on holidays for the past week and besides doing nothing ( vastly underrated) I took a few spins out of town in different directions , Blackrock/Dromiskin and the Cooley Penininsula. I saw a few houses that I made enquires about. most around 2000 sq ft, some a bit smaller/larger. What shocked me was not the numbers the auctioneers were looking for but the fact that every single house I looked at was either sold or nearly sold. Dundalk is by no means a must have address but obviously this frenzy to buy has now reached this area. One house I looked at had no kitchen, no floors fitted, no fireplace and while it was in a nicer area the price was €595,000. probably buttons by Dublin prices but this was a rural(ish) part of the cooley peninsula. I think we have gone mad.
 
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