Is this an anti property investment forum

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ninsaga said:
....you should be shot at dawn for that...seriously
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If I'm going to be shot then I'd prefer the firing squad to bring some gravitas to the matter alright.
 
heinbloed said:
Tourist booking numbers for Turkey are down by about 20% this year compared with the same month of the previous year -so far. Due to Avian Flue and fundamentalism.
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What exactly do you mean by fundamentalism? Examples please?
 
Go ahead and believe what the property section preaches every weekend. Get into the property pyramid scheme NOW! while property is still cheap. Go ahead and risk your financial future on a "rental" property with a 40 year 100% ARM loan (oh, don't believe all that hype about interest rates going up, they're going to stay at historical lows forever!).
Why would we bother learning from past property bubble and disasters because Ireland is different, Right??

Here's a little article from the (guys) at Royal Bank of Scotland. It focuses on American Property, but if you really use your imagination you may just be able to draw some parallels to Irelands situation.

[broken link removed]
 
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Here is my original post

I keep reading on websites such as this, and boards.ie a typical question such as

"Should I invest in a second home, or should I invest in overseas property"?

The most frequent answer from the moderators, or 'veteran advisors' of the boards generally goes along the lines of

"Shares have consistently shown a better return over a period of 5 years or more" or something along those lines.....and generally advise against (and some cases ridicule) people for thinking about investing in the property market..... and lo betide anyone cheeky enough to suggest buying a property in Bulgaria or Croatia etc...

OK, well I'm open to correction, but it would appear to me that property has outperformed shares over the last 5/7/10 years or so?

Can property prices in the Eastern Europe not rise as they did in the Western Europe?
 
irish equities rose by more over last ten years than irish residential property.historically equities in all market have outperformed residential property but not by a huge amount,sometimes its better to buy property(ie; when its cheap and rent covers mortgage) and sometimes better to invest in shares.
can prices rise in eastern europe like in western europe?? if incomes rise to same levels and the people in those countries have same desire to actually own the property they live in. there are many parts of western europe where prices arent high like germany france and italy so even if incomes rise in eastern europe countries theres no guarantee they will ever get to similar levels as uk/ireland.in uk/ireland there seems an undersupply of housing relative to most of the rest of europe,this may change in future.incoems will rise in eastern europe but theres no guarantee prices will rise in excess of income growth.if you can get a good rental return(better than 6% gross yield) and capital appreciation of 5%+ every year then it may be a good investment but so much can change to make your investment go sour,the location you buy in may become an unpopular place to live,locals taxes/laws /regulations may change affecting value of invesment,local /national economy of country you invest in can change for the worse . think of europe like the united states,certain states that are poor have low real estate prices even though america is a rich country so similarly theres no certainty of prices in poorer parts of europe rising to similar levels in richer european states.
 
Hi Culchie,

Here is my 2 cents.

There is an attractive logic in thinking that Eastern European property prices can outperform those of Westen Europe and indeed they may do so in the future but there are significant risks involved in investing in overseas property and it is part of the role of this forum to play the devil's advocate.

What may indeed be a bias against a lot of overseas property investment (particularly in less developed countries) is prompted in part by the shocking naivety of some of the so-called property investors who post here.

As for Eastern Europe there is lots to be optimistic about but too many people are buying there based on a visit to a property expo in some Dublin hotel rather than on a visit to the country itself. Moreover, property prices in much of Eastern Europe are as expensive relative to average (local) incomes as they are in Ireland.

There are plenty of smart people investing in property at present but they are making informed decisions based on a firm understanding of the mechanics of the property market and with strict reference to their own financial circumstances.

Your reference to the divergent performances of residential property and stock market is probably correct but they are two very different animals. Most people participate in the stock market via their pensions so they are buying gradually over a prolonged period of time, thus they are less exposed to sudden sharp reversals. Relative to property investment, their transaction costs are lower, they are substantially more diversified and, perhaps most importantly of all, they can take payment holidays should their financial circumstances change. Currently, property investors are buying an illiquid asset that has already seen several years of price outperformance and funding this purchase at rates that are as low as they are probably ever going to get. They are locked in for twenty years or more and, unlike standard pension payments, cannot take payment holidays. They are obliged to fund this investment no matter what their financial circumstances may be and are, in many cases, betting the equity of their home on this.

Would you not agree that property prices in many developed countries are closer to the top of their current cycle rather than the bottom?
 
Culchie try obtaining verifiable information on investment yields in any Eastern European property Market. Money flows from weak to strong hands, and I see the majority of the Irish investing in Bulgaria, etc as the weakest of weak hands.
 


Oh dear, most if not all the boxes ticked
 
Hi,

My point is not specifically meant to be an overseas investment question, I was highlighting that example as one where I often see people appear to be advised against such investment straight off the bat, regardless of how much homework and research has been done by the prospective investor.

What I'm trying to get at... I guess, is to challenge what appears to be entrenched views that "Shares are better than property over a significant period of time". It is rolled out as a standard answer.
I accept that probably up until 10 years ago this statement was true.... however I now think that this typical response needs reviewing in light of the last 15 years or so.

I mean, isn't 15 years a significant period of time? It's my whole working life thus far, it's 1/2 to 2/3's of a typical mortgage term, it's 20% of my time on this planet (touch wood).
Do these last 15 years no count for anything, or are they some sort of blip?

Ireland in the early 1980's was nearly bankrupt, look at the place now.... is it not possible that Eastern Europe (or Timbuctou) can follow a similar path for the next 20 years.... afterall our economy is very dependent on overseas investment, so what's to stop the multi-national investment moving to Eastern Europe and cheaper overheads.... and giving them 20 years of incredible growth the same as we had?
 
Culchie

You are suggesting that low cost economies in E Europe will attract foreign investment, because these locations allow MCN’s to achieve higher profits than in higher cost locations.

That seems like a reasonable argument, but what about the demographic trends in these nations, planning regimes, taxation issues competing locations that are more cost effective?

The former East Germany has been a member of the EU for a decade and a half and property prices have fallen there over this period. Ireland joined the EEC in 1971 however the price of property remained stagnant in real terms over the next two decades.

A challenge to any aspiring property investor in E Europe, find verifiable information on net investment yields for any market in Eastern Europe or Spain, Florida, Dubai, Cape Verde etc. If you can’t get this information you should steer well clear of property investment
 
The irish stock exchange has outperformed property over last 15 years.Ireland is close to being a one off,we are a small country so its much easier to create wealth for 4 million people than for 40 million people,i doubt there will be any eastern european countries that will have our level our financial success for numerous reasons. Dont forget that a lot of the increase in property over last 15years was general inflation which added up to 64% since 1991.
 
bearishbull said:
The irish stock exchange has outperformed property over last 15 years.
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Well if it has, I'll gladly stand corrected, as it would amaze me.

Where can I get the index figure for 1991 and compare it against today's figure?
 
bearishbull said:
The irish stock exchange has outperformed property over last 15 years..
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Hi bearishbull, you've mentioned this a couple of times. I'm not convinced. Where do you get your statistics from?
 
this day 1991 iseq was 1443 now its around 8000 ,add in dividends that you would reinvest and you get a larger return than property with more diversification. check out www.finfacts.com for detailed stats
 
so that's a 5 fold increase.


Property has increased far more than that. I'd say it's improved 5 fold in the last 7 years in fact (mine has anyway).
 
this day 1991 iseq was 1443 now its around 8000
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Which ISEQ index was this? There seems to be a few. There's a lot of info on finfacts.com and other websites to sift through. Does the index you refer to broadly represent what it did 15 years ago? Basically, if I had invested 1443 in 1991 would my investment be worth approx 8000 today?
 
Culchie said:
so that's a 5 fold increase.


Property has increased far more than that. I'd say it's improved 5 fold in the last 7 years in fact (mine has anyway).
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I don't know of any property anywhere in the world that has increased by 500% in the last 7 years. I'm dying to see your purchase price / current price.
 
Culchie said:
so that's a 5 fold increase.


Property has increased far more than that. I'd say it's improved 5 fold in the last 7 years in fact (mine has anyway).
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property has tripled since 1997 in market as a whole so i doubt your property have risen 5 fold since 1999.
 
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