Sherry Fitzgerald housing report

The latest Sherry Fitzgerald housing report is availabile here.

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Here is an analysis from todays Independent [broken link removed]

It seems incredibile to me that in the current climate of decreasing yields and increasing interest rate that almost half (41%) of new homes are being bought by investors - up from 30% at the same time last year.
In the second hand market it seems that 20% of the houses where bought by investors and 29% of houses where sold by investors, is this a sign that investors are getting out of the second hand market?

Seems renting is still cheaper that it was in 2001 - not many things you can say that about nowadays.

Affordabiility seems to have reached the very upper limit of what is advised by the Financial Regulator and is at 44% of net montly income for a couple in Dublin buying a new home on a 90% mortgage.

I don't think investors are getting out of the 2nd hand market. There appears to be a somewhat new phenomenon of people trading up not selling their previous property but renting it out and becoming defacto property investors. Just look at all the threads on this in the last couple of months. These people wouldn't show up in these figures as the property they are buying IS effectively their own home and not an investment property. A report from a mortgage provider may give a truer picture.

This reluctance to sell an asset that has previously given big returns for fear that you'll miss out on future gains coupled with a renewed desperation of investors to buy into new developements is strikingly similar, in my mind, to the last couple of years of the dotcom boom.

A Property Market Driven By Investors, Interest Rates On The Rise, Low Rents, And The Extreme Affordability Issue.... How Can Any Semi-intelligent Person Rationally Look At These Numbers And Still Say The Property Market Is Not Due For A Massive Correction? This Property Ladder Is Starting To Look A Little Shakey Kids, Start Stashing Away A Few Extra Quid For The Rough Ride Ahead.

SLAPPY said:

A Property Market Driven By Investors, Interest Rates On The Rise, Low Rents, And The Extreme Affordability Issue.... How Can Any Semi-intelligent Person Rationally Look At These Numbers And Still Say The Property Market Is Not Due For A Massive Correction? This Property Ladder Is Starting To Look A Little Shakey Kids, Start Stashing Away A Few Extra Quid For The Rough Ride Ahead.

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....and release the shift key....

Was stunned by that 41% figure when I read it this morning. Didn't think it was that high at all.

I think it'd be fair to say that of that 41%, 80%+ are speculators and not investors in the true sense of the word.

But stash it where? and in what?

We are approaching the edge of affordabilty.you can increase affordabilty by increasing mortgage term and/or by delaying capital repayments,once you go interest only and 35/40 years you can go much further to make it more affordable all the while prices keep booming. The weakness for investors in rental market indicates no huge undersupply of housing per se but the thing is that if enough people beleive prices will rise prices will rise even if supply exactly equals demand,this is down to positive sentiment but this can/and will change.By all fundamental measures income:house prices rent:houseprices etc theres vast over valuation and a correction is inevitable,its just a matter of time.

Cash will be king in the event of a bubble burst not just locally but also internationally given the level of OECD debt. A combination of Cash Deposits from strong banks and gold is the safe haven. I bought gold again yesterday through an ETF

The hyperinflation (well thats what I call it) scenario that continues to play out, definitely has legs for at least another 12mths globally, probably more beyond that. I do not underestimate the extent to which this liquidity/debt-fuelled party can go on; you can swap around debt and continually extend terms as more "equity" appears for a long time before you hit the wall.

Meanwhile prices soar. Every day the paper in my pocket buys less and less of just about anything. Euro, SF, US$ deposit rates are a joke, the fall in global bond prices is picking up. So for now gold and commodities are my safehavens. Nothing else seems to have value. I have 20%+ of my net worth now in gold or derivatives of (shares, ETFS etc), aiming for 30% by end of year.

When the party ends and true deflation takes hold, it'll be back to cash. Cash will be king, make that Emperor, in the next recession.

was watching rte show the other night about moving house and the presenters even seemed amazed at how quickly prices were rising and at how high market was now,do people buying houses seeing this assume this is great when i buy i will be one getting the benefit of all this rise or do any ask themselves why is this happening? and with renting so cheap this doesnt make sense or this is clearly mania and unsustainable.

on a side note bertie knocked to my house yesterday(he calls to constituency homes at least once a year) ,i was tempted to ask him about the bubble and his comments but decicded it would be pointless."bubble bertie" the builders buddy.

Gold has already gone up from $400 to $675 over last year and is up from below $300 in 2001, so are you now expecting it to go up by another leap ?

Also, it is priced in $ and as the euro is now on it's way up, it would seem rather foolish to expect gold to continue going up at the same rate in euros. A lot of new buyers have got into gold over the last year (ETFs, funds) so it looks a bit like another bubble to me but I may well be wrong.

Nothing wrong with having some gold in a balanced and diversifief portfolio but to call it a safe haven at current levels seems a bit far-fetched.

jpd said:

Gold has already gone up from $400 to $675 over last year and is up from below $300 in 2001, so are you now expecting it to go up by another leap ?

Also, it is priced in $ and as the euro is now on it's way up, it would seem rather foolish to expect gold to continue going up at the same rate in euros. A lot of new buyers have got into gold over the last year (ETFs, funds) so it looks a bit like another bubble to me but I may well be wrong.

Nothing wrong with having some gold in a balanced and diversifief portfolio but to call it a safe haven at current levels seems a bit far-fetched.

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i concur, 20% seems a lot to have in gold.

jpd said:

Gold has already gone up from $400 to $675 over last year and is up from below $300 in 2001, so are you now expecting it to go up by another leap ?

Also, it is priced in $ and as the euro is now on it's way up, it would seem rather foolish to expect gold to continue going up at the same rate in euros. A lot of new buyers have got into gold over the last year (ETFs, funds) so it looks a bit like another bubble to me but I may well be wrong.

Nothing wrong with having some gold in a balanced and diversifief portfolio but to call it a safe haven at current levels seems a bit far-fetched.

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You can price gold in anything, how much gold buys your house today versus last year? (Ans: a lot less) It's an alternative "currency". If there's a panic rush out of US$ (inevitable at some point), gold will do a moonshot. And there's no selling pressure. That's why I'm heading for 30% nw in gold.

The idea of "balanced and diversified" portfolio is financial advisor speak for people who don't understand how to preserve and grow their wealth. Bonds are garbage, unless denominated in SFs or C$. E.g. holding US bonds is worse than holding US$. Property as a safehaven? Gimme a break. I know someone with substantial net worth, and half of it is in one stock (Petro-Canada), the other half in precious and base metals. He rents his home. Gold, energy and industrial commodities are about the only assets worth investing in right now.

Again, all IMHO

Thread has meandered into discussion of gold, or alternative investments, both of which are already being discussed in The Great Financial Debates..

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