Is now a good time to sell?

Timing the market

Unregistered User - no offence taken.

I agree with a lot of what you have to say eg. Timing the markets is a mug's game. And I agree that no one can predict the future, well at least with a high degree of uncertainty.

However a few salient points:
- I did indicate that a friend has an apartment (good central location) on the market for a while with zero interest
- I am just closing on an investment property which I am selling. I spoke to 3 agents in relation to it's disposal about three months ago - everyone of them told me there was NO INVESTORS buying. This location is perfect for investors.
- Interest rates are heading north probably 5% by end of 2005
- Half decent locations cost 30-40 times earnings for investment purposes
- Supply for apartments is huge and loads more coming on stream
- Salaries over the last 2-3 years (in the real world, not the world of benchmarking) have risen at a fraction of property prices in Ireland

Based on the above I still think we are looking at a fall in apartment prices... and I think Dan McLoughlin was pretty in line with this recently.

MAC
 
i agree with mac

mac
Are you exiting the scene completely or only in aparts?
0]
 
Exiting the scene?

Hi Cerebus,

No not completely, but I recall back in 2000 (Nasdaq etc.) that not taking something off the table can be a costly mistake. After a good run since the mid nineties I think it would be irresponsible not to hedge at this stage given the points I made above.

MAC :)
 
nasdaq

As someone caught up in the telecom bubble, I totally agree.
hedge and diversify
and take something off the table
0]
 
only an fool or an academic...

This is in reply to Mr Blank's position.
With respect, your argument is EHM run wild. EHM(efficient market hypothesis) was originally proposed by a pair of academics based on the observation that US fund managers were unable to to beat the US stockmarket. Leaving aside the fact that since fund managers dominate the market we would expect the average manger to have average returns, a couple of other observations.
The Irish property market(even the apartment market) is not the US stockmarket. There are FTB, trader uppers, seasoned investors etc with sound reasons to buy. On the other hand there are speculators and others stretching themselves to get on "the property ladder".. The market is simply not efficient or comparable to the US stockmarket.
Secondly the whole point of EHM is reversion to the mean. After a period of outperformance a fund manager tended to underperform until his overall performance fell back towards the average. Well the Irish property market has had a spectacular unparalleled outperformance in the last 7 to 8 years. Time for a little reversion to the mean?
So prices are high on the basis of income multiple or renal yield, Interest rates are at record lows and likely to rise and supply is coming on at a record pace...
The future is unknowable but this may be return free risk.
 
only an fool or an academic...

My allusion to the EMH was in the context of the points raised about stockmarket "experts". Nowhere did I say that the Irish property market was governed by the EMH though. I stand over my point that the right time to sell is when you need the cash - or you decide that there is a better investment opportunity out there to switch to. We probably agree on more than we disagree to be honest.
 
House prices

House Prices Down Again
House prices have fallen for the second month running as the market continues to feel the effects of rising interest rates, latest figures show. Monthly growth has been steadily falling since reaching a peak of 0.9 per cent in February.Property Web site Hometrack says prices in England and Wales dipped by 0.1 per cent during the month to August 18.It is the second month in a row they have fallen by 0.1 per cent, and monthly growth has been steadily falling since reaching a peak of 0.9 per cent in February this year.The group said that during August the number of people looking to buy a new home also fell by four per cent, wiping out the excess demand there had been in the market.At the same time the level of the asking price sellers achieved fell for the fourth month in a row to 94.9 per cent, the lowest since September last year.Across the country 26 counties saw price falls during the month, while prices stood still in 21 and rose in just 10.The largest price falls were seen in Surrey, north and east London, East Sussex and Berkshire, where prices dipped by 0.4 per cent.The highest increase in the cost of property was seen in North Yorkshire, where prices rose by just 0.2 per cent.John Wriglesworth, Hometrack's housing economist, said: "Recent interest rate rises continue to take their toll on the housing market this month as house prices take another tumble."House prices are now very near their peak in terms of affordability and the recent housing boom now appears to be well and truly over."We do not, however, expect any housing market crash. Providing bank base rates remain below five per cent, present house price levels can be supported.''
 
Still don't see what relevance all these UK reports have to the Irish property market - which, in actual fact, is not a very fragmented market and perhaps not really assessable as a single one anyway...
 
Actually lads - it's probably too late at this stage!

MAC,

You seem like a pretty clued in and realistic investor and based on this I would like to get your thoughts on something.

I bought a house in Dublin 7 (Cabra) 8 months ago for 240 and put another 20k into totally refurbishing it. My plan is to let it out for 2-3 years and then all going well move in myself.

However, recent reports have me wondering about the market and I'm not sure if I would be better off selling now, holding the capital for a few years and then buying again at the right time. What do you think about the market in this area going forward?
 
Cabra....

Hi D,

I don't pretent to be able to predict the future but I do have an opinion. I know the area reasonably well as I am originally from Phibsboro.

Cabra is very central and this has been a big attraction for the yuppies (probably like yourself :) who have been buying in the area in recent years. I think it will continue to improve from the reputation it had years ago.

The most exposed area I would see going ahead is with apartments. Look around your area (the development at Reilly's Bridge for 6 THOUSAND UNITS, the Premier Dairies site, The old Finglas Road - apartments everywhere!). Yesterday I was in Smithfield on business and couldn't believe the number of apartments that are being built there.

So to summarise you have a house (which is good) in a location which is on the up and if you can afford to hang onto it I think you will have rental demand and any downside on the capital value should be minimal.

Have a stiff drink!
MAC
 
> I bought a house in Dublin 7 (Cabra) 8 months ago for 240 and put another 20k into totally refurbishing it. My plan is to let it out for 2-3 years and then all going well move in myself. However, recent reports have me wondering about the market and I'm not sure if I would be better off selling now, holding the capital for a few years and then buying again at the right time. What do you think about the market in this area going forward?

Seems to me that anybody who may be starting to panic after 8 months in the property investment game may not have done their homework properly in the first place in order to assess the viability of their investment, how various events might impact it and how long one planned to stick with it all going to plan (within certain parameters). If it's any consolation I'm sure you're not alone.
 
Comment

I have lived in the area all my life so I know it pretty well and the reasons MAC listed are the same ones I used when I bought it.

However, Its hard to find a unbaised commentator on this subject and that is why I put the question to MAC. I believe in seeking advice from genuine and experienced people at all times and not just when things go wrong.

So MAC, thanks for your comment.
 
............

No problem D, best of luck with it..... and stay away from all those apartments! :)

MAC
 
Right Time To Buy/Sell???

I bought a 3 bed investment house recently in Galway City in a very good location and have taken a longterm view on the property.
As everyone is aware rents have dropped but I have noticed an influx of 'NEW' Europeans from the accession countries into the rental market looking for work in this country. The economic indicators for full time employment are on the up so that will be good for the rental market!!.
Panic to sell now will only benefit the ones who are prepared to 'bottom fish'.
People who are worried about interest rate increases can protect themselves by fixing for 1 to 2 years to ride out the storm.
 
Re: Right Time To Buy/Sell???

People who are worried about interest rate increases can protect themselves by fixing for 1 to 2 years to ride out the storm.
Click to expand...

I don't think that's really much of a protection. A "storm" could happen anytime and it's not much good fixing for 1 year and then to be hit with interest rises after that. I would expect a longer fixed term of 5-10 would be proper protection?
 
Re: Right Time To Buy/Sell???

> People who are worried about interest rate increases can protect themselves by fixing for 1 to 2 years to ride out the storm

You may be protecting yourself against fluctuating repayments in this way but you will most likely not protect yourself from higher costs - i.e. you will generally pay a premium over prevailing variable/tracker rates if you fix, particularly over the medium/long term. Fix if you can't afford fluctuating repayments. Don't fix in an attempt to time the markets and save money (on interest charges). Don't forget that fixing also reduces flexibility (e.g. hefty penalties normally apply if you want to accelerate the repayments or redeem the mortgage early such as when you decided to liquidate an investment property).
 
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