Current public sentiment towards the housing market?

[gidxl03]

At last! Someone rising to the challenge of reviewing what the professionals say - good post Auerfa if I may!

More comments on OECD later (am supposed to be working!).

Why is yield in Germany 6 or 7%? Easy. Because prices have fallen over 1% a year for the last 10 years or more. That'll put up the rental yield for you. Prices fell because of many factors, the most significant of which IMO is demographics. As the population falls more buildings become empty, no matter how the overall economy does. So your fund in German property may do well on yield, but I wouldn't like to depend on getting my capital back again!

 

[Guest126]

Why is yield in Germany 6 or 7%? Easy. Because prices have fallen over 1% a year for the last 10 years or more. That'll put up the rental yield for you. Prices fell because of many factors, the most significant of which IMO is demographics. As the population falls more buildings become empty, no matter how the overall economy does. So your fund in German property may do well on yield, but I wouldn't like to depend on getting my capital back again!

This is typical property investment ignorance!

What happened BEFORE does not matter.
What matters is what will happen in the FUTURE.

Why would I need 6% on my German rent to match 3% on my Irish rent (as an investor)?

 

[phoenix_n]

So your fund in German property may do well on yield, but I wouldn't like to depend on getting my capital back again!

Well thats called risk which i am fully aware of. In fact i am actually counting on capital apprecation and the yield is the worst case sceanario.
Buy low. Sell high.

To be honest i am no financial advisor or guru. But what i am doing is following the smart money.

Besides..

Drops in asking prices have very little relevance. When you can show drops in SALE AGREED prices relative to other houses in the area that have already sold, then you have evidence to back up your argument of falling sentiment.

Just for a laugh, take a look at this diagram
http://www.telegraph.co.uk/money/ma...d=242&sSheet=/money/2006/06/19/ixcitytop.html

Ireland is not the worst by a long shot!

0% chance of property crash in Germany. Now its only an article but......thats pretty low.

 

[Firefly]

To all those in the bear cave...if you're right and property crashes in the coming months, this will have wide reprocussions for the entire economy with almost all affected....what are you planning to do? i've heard some saying that they'd leave etc...if you're so sure it's gonna happen why are you waiting around? For those hoping to snap up a cheap property...you'll be joining a long queue. We can all give aruguments for/against a crash till the proverbial cows come home, but what are you doing about it??

Btw, don't want to come across as jibing or provoking, I am genuinely interested in where you think the "wise" money is going..

Firefly

 

[whathome]

Btw, don't want to come across as jibing or provoking, I am genuinely interested in where you think the "wise" money is going..
Firefly

Maybe we should start a thread on "What will you do when the crash happens" - this thread is about sentiment

 

[gidxl03]

This is typical property investment ignorance!

What happened BEFORE does not matter.
What matters is what will happen in the FUTURE.

Why would I need 6% on my German rent to match 3% on my Irish rent (as an investor)?

Shocking! The guy is about to invest 10 or 100's K in a market and you claim it doesn't matter what happend "before". Not sure what before means - 2 months ago, a year ago, 10 years ago? If you have an established trend from the past (e.g. population in decline) it certainly will affect the FUTURE.

Please expand where my "typical property investment ignorance" lies - I don't think I get it yet. Certainly not the last line above ??

 

[Duplex]

At last! Someone rising to the challenge of reviewing what the professionals say - good post Auerfa if I may!

More comments on OECD later (am supposed to be working!).

Why is yield in Germany 6 or 7%? Easy. Because prices have fallen over 1% a year for the last 10 years or more. That'll put up the rental yield for you. Prices fell because of many factors, the most significant of which IMO is demographics. As the population falls more buildings become empty, no matter how the overall economy does. So your fund in German property may do well on yield, but I wouldn't like to depend on getting my capital back again!

The yield is 6 or 7% because it is, I doubt that investment yields were lower in Germany a decade ago. While the Americans, Brits and Irish have gone debt doolally over the past decade the Germans have keep their heads down over their lathes churning out BM's, Merecs, etc.

P.S. Compare the relative performance of American, British and German car manufactures, tells you something about the relative merits of investment in speculation versus industry.

 

[Calina]

To all those in the bear cave...if you're right and property crashes in the coming months, this will have wide reprocussions for the entire economy with almost all affected....what are you planning to do? i've heard some saying that they'd leave etc...if you're so sure it's gonna happen why are you waiting around? For those hoping to snap up a cheap property...you'll be joining a long queue. We can all give aruguments for/against a crash till the proverbial cows come home, but what are you doing about it??

Btw, don't want to come across as jibing or provoking, I am genuinely interested in where you think the "wise" money is going..

Firefly

It's not a question of where the wise money is going, it's more a question of knowing whether you can hang in here while the property market is re-calibrating itself.

Personally, I'd prefer to stay here if I could for family reasons. Much of my decision is not made on exclusively financial grounds, although I feel kind of unique in that respect. Very alone, actually. While I appreciate you are not being provocative in asking why people stay here if they see a crash coming, you also need to understand that such a decision is not always based solely on economic grounds. Rent has been an option for most people refusing to buy.

I can't do anything much about avoiding a crash other than not contributing to the bubble and that has been my policy for the past few years. What do you expect us to do about preventing a crash when we didn't do anything to create it?

I can't foresee how hard it will be for me to buy property in the event of a crash. I wish I could. I don't want to count on it either.

I get the feeling that in the question is an unspoken accusation that those of us who are strongly convinced that the Irish property market is unhealthy and unbalanced at the moment are going to be responsible for talking the market down. This is regrettable, since it was excessive and irrational demand on the part of others which drove it up. When it explodes I hope not to be collateral damage, but if I am, then I will move. But I won't be happy about it.

 

[CelloPoint]

To all those in the bear cave...if you're right and property crashes in the coming months, this will have wide reprocussions for the entire economy with almost all affected....what are you planning to do? i've heard some saying that they'd leave etc...if you're so sure it's gonna happen why are you waiting around?

I'm sticking around for my redundency payment. Why move now when there's still plenty of money in the economy and I have a stable job. One thing is for sure though, my savings will not be put in to Irish property. Germany is number one on my list at the moment.

 

[whathome]

From RTE's website today:

"Recent increases in interest rates rises pushed up mortgage repayments. Higher energy prices also had a significant impact last month, increasing the cost of petrol and home heating oil."
http://www.rte.ie/business/2006/0810/inflation.html

Mortgage repayments are a major component of increasing inflation.

Avoid inflation - don't get a mortgage

 

[Guest126]

Shocking! The guy is about to invest 10 or 100's K in a market and you claim it doesn't matter what happend "before".

"typical property investment ignorance"

What happened before the dot com bubble burst?
People got VERY VERY rich investing in dot coms.

When it burst...people that invested LATE to dot coms got badly burnt.

What happened before to an investment is no indicator of what will happen to it in the future.

 

[gidxl03]

Well thats called risk which i am fully aware of. In fact i am actually counting on capital apprecation and the yield is the worst case sceanario.
Buy low. Sell high.

To be honest i am no financial advisor or guru. But what i am doing is following the smart money.

Besides..

0% chance of property crash in Germany. Now its only an article but......thats pretty low.

Billions of smart money has already gone to Germany but prices haven't budged . Now if someone spots a trend where lots of imigrant workers start to go to Germany instead of Ireland then I'll look at Germany again.

The risk is low I agree but so is the potential for gain IMO. Also, the price is low for a good reason. Don't buy it just because it looks cheap relative to Ireland.

 

[soma]

To all those in the bear cave...if you're right and property crashes in the coming months, this will have wide reprocussions for the entire economy with almost all affected....what are you planning to do?

Personally speaking, I've plenty of options. But most of those options would be non-existant if I was nailed to a jumbo mortgage.

I'm working on my qualifications to make them more 'internationally-reknowned', considering a part-time MBA & working on my foreign language abilities.

i've heard some saying that they'd leave etc...if you're so sure it's gonna happen why are you waiting around?

Two main reasons:
1) My better half has yet to finish her PHD.
2) I'm making alot of dosh in Ireland at the moment, and saving a significant chunk of it. Splitting the savings between cash & equities to hopefully keep my options open and remain largely liquid.

For those hoping to snap up a cheap property...you'll be joining a long queue.

I don't care about a 'cheap' property - what I care about is a property thats value for money. I'll happily buy that nice house in D6 when the repayments are at least in the same league as the equivalent rental payments.

I have no problems with settling in another EU country or perhaps even further afield. I also have a slowly but surely increasing distaste for Irish culture & society in general (I used to live in the US and Ireland seems to importing alot of it's more negative qualities).

 

[gidxl03]

What happened before the dot com bubble burst?
People got VERY VERY rich investing in dot coms.

When it burst...people that invested LATE to dot coms got badly burnt.

What happened before to an investment is no indicator of what will happen to it in the future.

I think what you mean is that past performance is not a guarantee of future returns.

What I mean is that the past (up to the present day) needs to be fully understood before investing. New events in the future will ensure that no trend continues forever. But these are difficult / impossible to predict.

Trends I see in Ireland is increasing population, pro-investment taxation policies, focus on the knowledge economy. If this prediction is incorrect, then my optimistic outlook for Irish property is misplaced.

 

[Duplex]

From RTE's website today:

"Recent increases in interest rates rises pushed up mortgage repayments. Higher energy prices also had a significant impact last month, increasing the cost of petrol and home heating oil."
http://www.rte.ie/business/2006/0810/inflation.html

Mortgage repayments are a major component of increasing inflation.

Avoid inflation - don't get a mortgage

From that report;

The SFA said there were stark differences between inflation in the services sector at 6.4%, while in the traded goods sector it was running at 1.7%.

Service sector inflation in Ireland is out of whack entirely.

 

[StoppedClock]

IIf this prediction is incorrect, then my optimistic outlook for Irish property is misplaced.

Are you currently buying property in Ireland and and/or advsing others to do so?

 

[Guest126]

I think what you mean is that past performance is not a guarantee of future returns.

No what I mean is that past performance is no indicator of future performance - in fact many contrarian investors believe it is an inverse indicator of future performance.

I do not believe in either theory - that of the contrarians nor your one which seems to be "it went up before so it will go up again probably".

 

[Remix]

Another slant on very low yields in Ireland is in the rent vs buy equation being more favorable towards renters.

Yields are so poor and house prices so high in my area (D6W) that house prices need only fall by a very small amount (1% - 2%) per year for me to be making a profit by renting versus buying.

 

[phoenix_n]

Billions of smart money has already gone to Germany but prices haven't budged ...

...Don't buy it just because it looks cheap relative to Ireland.

Of course. You dont buy anything because its cheap relative to something else unless you actually need it.

When it comes to investing , you invest because of sound financial principles (i come from a business background).

And just at the moment Irish property is not a sound investment.

 

[Duplex]

Trends I see in Ireland is increasing population, pro-investment taxation policies, focus on the knowledge economy. If this prediction is incorrect, then my optimistic outlook for Irish property is misplaced.

gidxl03

I suppose its a question of faith in the future. Lets supposed you own a helicopter (maybe you do). You need to have the thing regularly serviced, the engine checked over etc. you are given the option of the services of two mechanics one an optimist the other a pessimist who would you choose?