Buy to Let Investors are Suffering Triple Whammy! Article www.independent.ie

barryl

Frequent Poster
Messages
195
Re: Buy to Let Investors are Suffering Triple Whammy! Atticle www.independent.ie

Now I'm not stupid, I know Irish house prices are (were) higher than 10, 20, 30 years ago but I can't find any statistics to proove that they beat inflation. Do you have access to a house price index which charts Irish house prices over the last, 50 years, say? Here's the inflation statistics.

To my uneducated eyes I would suspect that Irish property prices didn't beat inflation in the 20 year period between 1971 and 1991. I'd certainly put my hands up and say I'm wrong if you could just point me in the direction those house prices stats.
1971 average price for 3 bed semi in Ireland c.4,500 punt 1991 45,000 punt,(may not be 100% correct,but close to the mark)
 

ClubMan

Frequent Poster
Messages
43,869
Re: Buy to Let Investors are Suffering Triple Whammy! Atticle www.independent.ie

Inflation may not be the only relevant factor here. In past years I don't think that investors could write off (all or any of?) the mortgage interest against rental income so it may be that you'd need to see if house price capital gains outpaced both inflation and mortgage interest rates where relevant. And of course there are other ongoing and acquisition/disposal costs associated with owning a property which need to be factored in. And then you'd need to compare with other investment options (e.g. equities) in order to assess the opportunity costs of investing in property rather than something else. When somebody has the answer maybe they could call me? :)
 

ubiquitous

Frequent Poster
Messages
3,782
Re: Buy to Let Investors are Suffering Triple Whammy! Atticle www.independent.ie

1971 average price for 3 bed semi in Ireland c.4,500 punt 1991 45,000 punt,(may not be 100% correct,but close to the mark)
That may be the case but its also the case that Ireland suffered exponential inflation in the 1970s & 1980s (which may or may not be reflected in official statistics) - so much so that the economy was on its knees and property investment was really only an option for the very rich and property speculation was non-existent. Banks were notoriously reluctant to give credit to anyone to buy property, even their own home - not exactly a great sign that there was money to be made in the sector.
 

ubiquitous

Frequent Poster
Messages
3,782
Re: Buy to Let Investors are Suffering Triple Whammy! Atticle www.independent.ie

In past years I don't think that investors could write off (all or any of?) the mortgage interest against rental income
This isn't correct, apart from the 1998-2001 period following the 1998 Bacon report.
 

Howitzer

Frequent Poster
Messages
1,459
Re: Buy to Let Investors are Suffering Triple Whammy! Atticle www.independent.ie

1971 average price for 3 bed semi in Ireland c.4,500 punt 1991 45,000 punt,(may not be 100% correct,but close to the mark)
Do you have a source?
 

barryl

Frequent Poster
Messages
195
Re: Buy to Let Investors are Suffering Triple Whammy! Atticle www.independent.ie

1971 average price for 3 bed semi in Ireland c.4,500 punt 1991 45,000 punt,(may not be 100% correct,but close to the mark)
period from 1971-1991 has a ratio of 1/10 or put it another way 10 times the original price

period from 1991 63,500 euro(50,000 punt)to 2011 average house price would have to be 630,000 to have an = ratio to prev.20 years

is it possible that 1971-1991 was a better time to own investment property?
 

ubiquitous

Frequent Poster
Messages
3,782
Re: Buy to Let Investors are Suffering Triple Whammy! Atticle www.independent.ie

is it possible that 1971-1991 was a better time to own investment property?
As I said above in relation to that period...

Banks were notoriously reluctant to give credit to anyone to buy property, even their own home - not exactly a great sign that there was money to be made in the sector.
 

Howitzer

Frequent Poster
Messages
1,459
Re: Buy to Let Investors are Suffering Triple Whammy! Atticle www.independent.ie

no source sorry,but the example is real
One example can't really be used as the basis for a rational argument. Property prices didn't beat inflation between 1971 and 1991, the price of one property did. That's a poor argument for saying that property always beats inflation.

property prices have a long history of beating inflation over any 5-10 year period
FYI, inflation over the same period had a compound value of 780% - according to the CSO statistics quoted.
 
Z

z109

Guest
Re: Buy to Let Investors are Suffering Triple Whammy! Atticle www.independent.ie

check your charts again and you will find exponential growth the following years thus property stays ahead of inflation,always remember that property is a long term investment
Um, you did say any 5-10 year period did you not?

I gave you the benefit of the doubt and picked a 10 year period.

Your statement is demonstrably false. Please withdraw or qualify it.
 

Jethro Tull

Frequent Poster
Messages
262
Re: Buy to Let Investors are Suffering Triple Whammy! Atticle www.independent.ie

I'm still waiting to hear why Ireland is different
 

barryl

Frequent Poster
Messages
195
Re: Buy to Let Investors are Suffering Triple Whammy! Atticle www.independent.ie

Um, you did say any 5-10 year period did you not?

I gave you the benefit of the doubt and picked a 10 year period.

Your statement is demonstrably false. Please withdraw or qualify it.
Its usefull information as a guide,you are spliting hairs
 

Afuera

Frequent Poster
Messages
413
Re: Buy to Let Investors are Suffering Triple Whammy! Atticle www.independent.ie

Its usefull information as a guide,you are spliting hairs
It's not actually based on fact though is it? It would be more accurate to call it misinformation.
 

ubiquitous

Frequent Poster
Messages
3,782
Re: Buy to Let Investors are Suffering Triple Whammy! Atticle www.independent.ie

...the kind of misinformation that fooled a lot of amateur property investors into thinking they were tycoons, which brings us neatly back to the "surprising" nightmare scenario outlined by the OP...
 

Howitzer

Frequent Poster
Messages
1,459
Re: Buy to Let Investors are Suffering Triple Whammy! Atticle www.independent.ie

Irish house prices 1971 to 2005 adjusted for inflation.


http://www.flickr.com/photos/rosscads/455270545/
Excellant work. So for the 20 year period 1971 - 1991 house prices marginally beat inflation (holds hand up). It's only in the 14 years afterwards where the truism that house prices always beat inflation can be seen. The figures only run to 2005 so the inflation beating credentials of a falling housing market since then are, as yet, unproven.
 

MrMan

Frequent Poster
Messages
1,470
Re: Buy to Let Investors are Suffering Triple Whammy! Atticle www.independent.ie

I'm still waiting to hear why Ireland is different
in fairness to Barryl, his statement was as elaborate as yours, why don't you outline your points to him if you want to debate.

It's not actually based on fact though is it? It would be more accurate to call it misinformation.
Did he not say it was a 'real' example?

...the kind of misinformation that fooled a lot of amateur property investors into thinking they were tycoons, which brings us neatly back to the "surprising" nightmare scenario outlined by the OP...
While I'm not going to stray into debating inflation and statistics the above quote is quite a regular occurence albeit generally in differnet words, but having the same meaning. Are some people just upset that they didn't jump on board the bandwagon at the time and make some easy money or do they really believe that those that invested in property were 'amateurs' pretty much fools for some reason.
 
Z

z109

Guest
Re: Buy to Let Investors are Suffering Triple Whammy! Atticle www.independent.ie

Did he not say it was a 'real' example?
No he said that house prices always beat inflation in any 5-10 year period.

While I'm not going to stray into debating inflation and statistics the above quote is quite a regular occurence albeit generally in differnet words, but having the same meaning.
We are not debating inflation and statistics, we are assessing the effects of inflation on an investment sum and whether property in any given period of 5-10 years will preserve that investment sum against inflation. Please read previous posts before replying.

Are some people just upset that they didn't jump on board the bandwagon at the time and make some easy money or do they really believe that those that invested in property were 'amateurs' pretty much fools for some reason.
That's an insulting remark to aim at those who are trying to prevent further misinformation being spread about the risk/reward evaluation of property as an investment.

There is no equation between 'amateur' and 'fool' unless you have no business plan of how your investment is going to give you a return.
 
Top