gloomy predictions for the Irish rental market were misplaced

Virtually would be nicest. Thats If everyone agrees the rules first .

A couple of €10 bets between the members allowed on the side with a maybe a 'tax' into a kitty and a vote around the 15th of December on who gets the kitty ....for being most right/ most useful all year.

Centrally invest 50% of the nominal fund , kitty vote based on activity there, and to invest the other 50% as per members own ideas but in keeping with the 'philosopy' .

Run another book on that 50% investment , winner takes all :) . No real money but enough to focus the mind !!!!!

I hereby name it the Development Opportunity Syndicate Simulator , DOSS in short .
 
"Joe, any interesting links to investment views of Tony O'Reilly or Soros you'd like to share?"

Well I took Tony O' Reilly's quote from the gold.ie website it is near the bottom of this link
[broken link removed]

Also printed it here

"Asian economies are growing while Europe and the US are in decline . The solution is for the major economies to adjust their currencies to levels which reflect today's economic reality. There is a general feeling that Europe, particularly "old Europe" as a manufacturing and potentially services area, is, or will become, increasingly uncompetitive . . .

Essentially this means that manufacturing and services in Europe will be a shadow of their former selves . . .
In the medium and long term - not to speak in certain cases of the short term - this bodes ill for Ireland, and for Europe.
The question is what can be done about it? . . .

There are a number of answers, not least being a growing sense of awareness both in Europe and the US, that they are engaged, as assuredly as they were in the Second World War, in a major battle for economic prosperity and survival.
Simply stated, as we contemplate this growing struggle . . . it becomes clear that companies act in this way [relocate] because European and US currencies are overvalued in relation to Asian currencies, particularly the Chinese yuan.
The solution to this is a major and organised adjustment of currency parities. Otherwise, there is a risk of a drift to protectionism, as is actively being pursued in the US Senate today (and as happened, to drastic effect, in the 1930's with the Smoot-Hawley Act in the USA. . . .

I believe therefore that all the major parties, the EU, Britain, USA, China and Japan should urgently organise a major conference along the lines of the Plaza/Louvre Accords of 1985 and 1987 which would indicate that the parties believe is fair value for a basket of currencies for a period of say, 5 years, and a concurrent declaration that they will act in concert against any speculation or gross overvaluation of a particular currency against it's neighbours.

Such a declaration will bring economic stability and growth to the world on a steady and measured basis.

Nothing else will."
Asian economies are growing while Europe and the US are in decline
Sir Anthony O'Reilly, The Sunday Independent
There are many other good commentaries on this website. Admittedly there maybe a bias towards getting you to invest in bullion.


 
Going back for a moment to the earlier question on vacant properties. An article this morning in

http://www.unison.ie/business/irish/stories.php3?ca=80&si=1402359

quotes Davy Stockbrokers:

The house-building peak is nigh and it might be better to begin the adjustment process sooner rather than later," the report says. The number of new units left vacant needs to decline from the present 30pc towards the historical average of 11pc
Click to expand...

On the possibility of the bubble bursting :

They say it is difficult to know what might trigger a sharp fall in the housing market, or when it might happen. "Sentiment can change without an observable catalyst - think back to 2000 and the bursting of the technology bubble."

Investors might be deterred by falling or static rent yields, or the demand for second homes might be hit by tax changes or loss of confidence in future price rises, the report says. In any event, the underlying demand for homes to live in is set to fall rapidly from 2007 onwards.
Click to expand...
 
When does the April ESRI/TSB index come out... the April one is due, no?

Here's March's...
[broken link removed]

Will it go negative?
 
Comparative Hard Stats and Commentary from the US on Interest Rates and Overbuild

CoffeeBrew said:
"Sentiment can change without an observable catalyst - think back to 2000 and the bursting of the technology bubble"
Click to expand...

Huh !?

It seems my own 'observation' back then that tech companies with no or little revenue were not worth 100s of millions of €€$$$£££ was obviously overlooked by the 'experts' who were working for firms that wanted to sell more of the damn things....shares that was then :) . The lemmings stampeded into the market figuring that they could not lose and then they stampeded out again , trampling some potentially viable companies in the rush....had the expectations not been so high in 1999 / 2000 that is .

The lemming rush out of the asset is the scary bit when a bubble bursts. They get into it because 'everyone' is doing it and get out of it for the same reason , not because of any innate long term understanding of asset valuations or trends or value or herd behavior . The herd animal always overestimates its individual objectivity and judgement the poor crayther.

I fully expect house prices to remain at historically high income multiples even AFTER the bubble bursts. That is because the cost of servicing home loans appears set to remain historically very low .

See comments in this good long termist article here from CNN on the subject http://money.cnn.com/2005/05/23/real_estate/mortgage_bubble/index.htm

especially from those whose job is to think long term , Freddie and Fanny .

"Mortgage financing firm Freddie Mac put the average 30-year fixed-rate mortgage at 5.71 percent last week. While that was higher than some weeks over the last year, it's still below any annual average rate since Freddie started tracking the numbers in 1973 And it's below the rate last June, when the Fed started raising short-term interest rates."
Click to expand...

and this fella here

"The crystal ball on rates

Last week Bill Gross, manager of the world's biggest bond fund, wrote a commentary predicting long-term bond yields would hold at or near their current low levels for several more years.

"If we had to forecast (and we do), we believe a range of 3.75 to 4.5 percent for 10-year nominal Treasuries will prevail during most of our secular time frame," said Gross, meaning three to five years.

Mortgage rates often follow the direction of long-term Treasuries, such as the 10-year, although not always in lock step. Frank Nothaft, chief economist for Freddie Mac, shares a similar view that mortgage rates can stay low along with the Treasury yields. "
Click to expand...

but a sharp comment on what Gross Oversupply can do to a market ....the nub of the problem in my opinion.

"Some still see bubble

But some economists who are less sanguine say they still see a housing price bubble. Dean Baker, the co-director of the Center for Economic Policy Research, admits he's been wrong about when mortgage rates would rise, but he still expects them to top 7 percent as soon as year's end. And he said that even if mortgage rates don't start to climb, he expects home prices to start coming down, sooner rather than later.

"We're (THE USA) building at a 2 million-a-year pace, which is more than demand, and we're going to keep building at that pace until home prices correct," said Baker. "It's already showing up in the rental market, oversupply is pushing down rental prices." "
Click to expand...

uhhhhh 2 units million a year( leading to a possible oversupply in the US) in a country of 300 million people is:

1 unit per 150 persons per annum

80,000 units in Ireland is

3 units per 150 persons per annum

Thats Some Bubble is it not :(


de Tonk
 
Some considerations for DOSS Hedging on the US side.

Overall US home construction index is $DJUSHB (can be viewed on stockcharts.com)

Some sectors to conside

Mortgage and Related Services

Household – Appliances

Savings and Loan (similar performance in other banks too)

Building Paint and Allied

Building Wood Products

Household and Office Furniture

Building Cement, Concrete and Aggregate

Building Construction Products Misc.

Building –Residential Homebuilders

Some companies in the last category:

Beazer Homes USA Inc
Pulte Homes Inc
KB Home
Lennar Corp
Toll Brothers Inc
Hovnanian Enterprises Inc

(Sectors & lists would need to be widdled down)

Others?
 
and see http://www.virtualstockexchange.com/ to 'trade' in these , team competition option available

step 2 of the Signup is untick everything and click next , if a number of persons can do this we can set up a competition (or 2 or 3 ) and have at the Virtual Market :)


just a thought
 
A good classification system that .

I would not contend that 80% WANT a crash as asserted.

I would say 10-20% do, incipient FTBs and Bottom Feeders such as de Tonk who will be minded to go in when the money is to be made again. The other 80% will suffer ...however vicariously.....from a negative wealth effect .
 
walk2dewater said:
When does the April ESRI/TSB index come out... the April one is due, no?

Here's March's...
[broken link removed]

Will it go negative?
Click to expand...


W2DW, Looks like April's is out but not yet on the website.

[broken link removed]

house price inflation for calendar 2005 is heading towards 3.9%. This fact may concern some Buy To Let investors. According to Davy Stockbrokers, the gross yield on many investment properties is no more than 3%.andnbsp;If capital appreciation is off the table, some investors may decide to sell out before the expected upward turn in interest rates next year.andnbsp;Such a move would prompt further downward pressure on prices.
Click to expand...

Also keep in mind that this index lags by about 2 - 3 months.
 
These are very interesting statistics on numbers of vacant 'second homes' along the Atlantic counties. The idea of devolving infrastructural costs to the owners of 'second homes' is a sound one. Wherever there are 'second' or 'holiday homes' there is simultaneous economic depression of the area (the 'locals' are covering the costs of habitations of absentees, essentially!) plus upward pressure on property-prices necessitate the younger 'locals' moving to the nearest big towns. A number of councils along the seaboards of England and Wales have addressed this in restricting numbers of outsiders who can purchase second homes and in putting taxes on holiday properties into place.
 
Marie said:
A number of councils along the seaboards of England and Wales have addressed this in restricting numbers of outsiders who can purchase second homes and in putting taxes on holiday properties into place.
Click to expand...

Some related news on this:

http://www.unison.ie/breakingnews/index.php3?ca=9&si=73648

The Government's National Economic and Social Council has reportedly recommended the imposition of a special tax on second homes.
Reports this morning said the proposal was contained in a study on Ireland's housing needs that was presented by the NESC at a conference in Cork yesterday.

The body has reportedly called for measures to address the purchasing of second homes as investments, which is pushing up house prices and restricting opportunities for first-time buyers.

This morning's reports said the NESC had also called on the Government to increase its spending on social housing from €600m to at least €1.4bn-a-year over the next 10 years.
Click to expand...
 
I think that news item deservers its own thread, but I do not believe there is any chance of a tax on a second home from a fianna fail/pd government.

We need more houses built, putting a tax on people buying second homes would reduce the investment in building new houses.

However when we have absolutely no control over our central bank interest rate, the government needs to have some method of curbing house price inflation.
 
Prior to the Euro’s introduction the issue of divergence in the economies of the Euro area was supposedly addressed with the suggestion that fiscal policy would be employed by governments to control excess liquidity in domestic economies.
 
Duplex said:
Prior to the Euro’s introduction the issue of divergence in the economies of the Euro area was supposedly addressed with the suggestion that fiscal policy would be employed by governments to control excess liquidity in domestic economies.
Click to expand...

Yes! Which was great in theory but governments want to get re-elected. Whereas an independent central bank should do what is best for the economy but a government will do what it takes to get re-elected!

Didn't the government attempt to introduce a property tax way back in 2000 or something, and the idea was quickly squashed? can't remember the details.
 
Seeing that there has been some crystal ball/navel gazing on rates in this thread it's interesting to note that the IMF think that rates need to fall rather than rise in the short term.
 
As of today, the futures market is putting a 1 in 4 change of a .25 reduction to 1.75 by the end of the year but the ECB is attempting to stamp out talk of a rate cut.

Rate cuts might be of benefit to big stagnating economies but are not necessarily a good thing for those countries already experiencing anaemic economic booms fueled in large part by debt and property speculation.

It's like cranking up the power to the big generator despite a risk of overheating and damaging the smaller ones !

 
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