JohnBoy said:the p/e in the ISEQ is 16; on the FTSE it is 15.5; on the DAX it is 12.7. i would guess that the p/e ratio of an investment property in Ireland would be at least 30 but probably closer to 45. so your investment property is probably two to three times more expensive than the stock market in terms of earnings multiples.
the p/e in the ISEQ is 16; on the FTSE it is 15.5; on the DAX it is 12.7.
if house price growth slows, and it will have to sooner rather than later, you could be stuck with an investment that is not going up in value in real terms and that produces no income above the cost of the mortgage - hardly a retirement nest egg.
if you can find a property that gives you a gross yield of your mortgage rate + at least 30%-50% extra per month then go for it but the time to buy a property in Ireland that produces a healthy rental yield was several years ago.
Could you post a link to your info source please,having difficulty finding proper index analysis.
Well the value of the property may not be going up in real terms in this scenario. But surely the value of your INVESTMENT is. The rental income is paying the mortgage and each year the value of the equity you hold in this leveraged property rises. If you put a deposit of E50,000 on a E150,000 property then, even with the value staying static, your rental income will have turned your E50,000 into E150,000 over the lifetime of the mortgage. Which doesn't look bad to me. Or am I missing something - I may be....
However, with a property, capital appreciation has to be taken into account. Some say we should expect a crash, others a soft landing. In any event you should plan to hold onto the property for at least 5 years, which would safeguard you against any drop in prices i.e. give the market time to recover.
Lumpsum said:Yes sure. But I was positing the most unlikely scenario of a property remaining static in value over 25 years. Even snail's pace capital apreciation will surely make a leveraged property investment outperform everything else? No expert, but often think this factor is missing from posts comparing property investment with others.
liteweight said:Yield is calculated by taking the annual rental, divided by the cost of the property (incl. stamp duty, fees etc.) and multiplied by 100.
yield shall be calculated by considering the value of the property at calculation time rather than cost at acquisition time.
can you point out the thread on "yield" subject you are referring to so i'll continue there?
can you point out the thread on "yield" subject you are referring to so i'll continue there?
Whathome has the wrong thread, it was 'buying property in a thriving midland town'!
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