The Sunday Indepnedent ran a piece quoting Karl Deeter on the danger of high house prices, he said that ‘trees don’t grow to the sky’ which is a common expression in economic analysis that warns of the dangers of extrapolation upwards.
It’s common to hear ‘never again’ until something does happen again and that’s a real risk in housing because the headwinds are there to encourage an industry to go into hyper-supply which does resolve shortages but which usually also overshoots.
We plan to go through the maths soon of why the tax breaks that ended in 2014 were a bigger driver of a slow down in the market than the Central Bank rules, this aside, people will still invest in property.
The world of investment is relative, not absolute and for the €90 billion sitting in deposit earning 1% (at best) or less the implications are clear, you have to invest somewhere or get substandard returns which will eventually be eroded by inflation.
Along with a future of quantitative easing in Europe, the likelihood of a Dollar that will get stronger and a stock market that looks toppy to many, property will remain a focus for better or worse with many people who have money.
On the capital side you have a known shortage of property, that would lead some to believe there are significant capital gains to be had. On the dividend or yield side, you have strong rents which are still showing signs of rising.
Rents are certainly very strong versus the return on deposits even when you …
Why have a two handed economist when you can have two one handed economists? (my jokes deteriorate in quality by the day)
Today there are two very different opinions on the property outlook in Ireland from two very different commentators, first up is David McWilliams who wrote a piece in today’s Independent, where he says the nation is a ‘Bankocracy‘ and that property prices have much further to fall – to the tune of a further 45% according to his figures (saying that current avg. prices are €250k and they should be c. €135k). He implores people to look at the fundamentals of the market and price via yields [disclosure: we support his valuation approach, it was the basis of our investor reports].
McWilliams is probably right, the market is not at the bottom, having said that, there is no metric which can gauge bottoms, even in stock analysis you can use Fibonacci numbers or Bollinger’s to look for trends or turning points, but there is no …
Pat Kenny had two well known commentators on the Late Late show on Friday, David Cantwell a director with the largest new homes estate agent Hooke & MacDonald and Derek Braun author of ‘Irelands House Party’. The section on the show had some interesting debate and both sides had some valid points, some things however were not mentioned – for instance – Braun pointed out that huge profits were made on a certain south side development (and nobody doubts that) but there was no mention of the taxation that is paid via contributions to local councils, VAT, other taxation, paying bubble wages etc.
Cantwell spoke about property prices being at their bottom (granted this is only in his opinion) when considering the supply and other economic factors they clearly cannot be, as well as failing to mention some of the common sense home truths which Braun used to shoot down his arguments.
The only issue I have is that of all the developers I know only one isn’t going into liquidation, in a
This is an interesting two part video, it was first published in early 2008, before the property crisis really got into full swing, this video should help anybody understand some of the reasons for renting being better than buying. This is an Amercian video so there are things such as property tax which we don’t have in Ireland (annually, some people still pay a front loaded property tax called ‘Stamp Duty’), but the rational remains the same, you need to do your sums
We have said for some time that house prices will fall throughout 2008, we saw a recent article in the Sunday Tribune saying that house prices would fall a further 10% in 2009. Our belief has been for some time that we will see the most dramatic drops in Q1 & 2 of 2009 and that after that the speed of decent would slow down considerably, coming to a ‘no growth’ landing some time in late 2009. There are reasons for this which we will explain below.
Firstly we have to see the market accept the rationalisation that is upon it, sites like Irishpropertywatch.com are tracking the fall in prices, yet there are still well publicised people in the construction and business communities calling for government intervention. This must be resisted as must all irrational request on the government. They hold the purse strings but that doesn’t mean they have to spend until lobbyists or special interest groups are satisfied, they must instead …
