Why bother investing in Ireland?

Euroland · 28-03-2011 12:20PM

K-9 wrote: »

New Zealand and arguably the UK are in bubbles as well.

After a bit of research you would realize that up to 90-95% of the countries in the world are effectively “bubbles” according to your classifications.

danbohan · 28-03-2011 12:21PM

ei.sdraob wrote: »

Now we are comparing Leitrim to worlds most important cities :rolleyes:

well say what you will ei sdraob , but i always felt drumshambo resembled downtown tokyo !

Euroland · 28-03-2011 12:22PM

danbohan wrote: »

it certainly is one of the strongest exporters that has the IMF in situ,

So what? We borrow and than repay, as anyone else does. The only problem is the bank debt, which we should either restructure (at up to 95% haircut) or just default on it.

danbohan · 28-03-2011 12:24PM

Euroland wrote: »

So what? We borrow and than repay, as anyone else does. The only problem is the bank debt, which we should either restructure (at up to 95% haircut) or just default on it.

really , so the other 20billion deficit is nothing . i dont know what your agenda is friend but wishful thinking wont bring back 2006

Euroland · 28-03-2011 12:26PM

danbohan wrote: »

really , so the other 20billion deficit is nothing . i dont know what your agenda is friend but wishful thinking wont bring back 2006

Budget deficit can be easily adjusted and just needs a political will on it.

K-9 · 28-03-2011 12:26PM

Euroland wrote: »

After a bit of research you would realize that up to 90-95% of the countries in the world are effectively “bubbles” according to your classifications.

90-95%, that's a pretty impressive statistic.

What's the average ratio?

I'd say the US after a market correction is probably nearer the average, not the UK or Australia and certainly not China, but no doubt you'll just dismiss that too and fight the good fight.

Euroland · 28-03-2011 12:29PM

K-9 wrote: »

90-95%, that's a pretty impressive statistic.

What's the average ratio?

I'd say the US after a market correction is probably nearer the average, not the UK or Australia and certainly not China, but no doubt you'll just dismiss that too and fight the good fight.

As I said before, US and Ireland are well below the average, as the world’s average could be somewhere around 7-8, or higher.

Count Dooku · 28-03-2011 12:32PM

Euroland wrote: »

The property owners, as they were betting mainly on capital appreciation.

may it is government subsidizing property owners by excessive rent supplements?

K-9 · 28-03-2011 12:33PM

Euroland wrote: »

As I said before, US and Ireland are well below the average, as the world’s average could be somewhere around 7-8, or higher.

I remember reading a piece on this a couple of months ago suggesting the opposite. Might dig it out when I get a chance.

Amhran Nua · 28-03-2011 12:34PM

Euroland wrote: »

The property owners, as they were betting mainly on capital appreciation.

But many landlords bought before the bubble ever started, so capital appreciation was not a factor for them. They aren't running pubs here, where they can increase the prices according to their costs.

If you own rental property, try doubling your rates and see how many tenants you get in. The tenants set the average rents, not the landlords.

Euroland wrote: »

Here are just a few multiples:

Australia 7.1
Canada 4.6
China 11.4
New Zealand 6.4
United Kingdom 5.1
United States 3.3

And, usually, the further you go towards less developed countries, the higher is the multiple.
As regards to rent - similar story: in less developed countries people spend up to 50-100% of average gross household income on average rent.

Eh you have no quoted source for any of this. Again those figures are meaningless, they are all over the place without rhyme or reason. Stick to rent to property price ratios, you won't go far wrong.

In less developed countries people on average pay nowhere near 50% of their income towards rent.

Euroland · 28-03-2011 01:46PM

Count Dooku wrote: »

may it is government subsidizing property owners by excessive rent supplements?

To some extent, yes. Government was subsidizing the owners, owners in turn, were even more subsidizing the tenants. This is why Ireland for many years had unhealthy rental returns situation, and still has.

Euroland · 28-03-2011 01:47PM

K-9 wrote: »

I remember reading a piece on this a couple of months ago suggesting the opposite. Might dig it out when I get a chance.

OK, have a try.

Euroland · 28-03-2011 01:52PM

Amhran Nua wrote: »

Eh you have no quoted source for any of this. Again those figures are meaningless, they are all over the place without rhyme or reason.

These figures are coming from the International Housing Affordability Survey 2011, they may not be precisely correct with the numbers (I have spotted there some mistakes), but they give the flavor of it: almost all countries in the world have the affordability multiple of well above 3.

Euroland · 28-03-2011 01:58PM

Amhran Nua wrote: »

Stick to rent to property price ratios, you won't go far wrong.

With rent we usually would have a percentage of the average annual rent to the average annual gross household income. In most of the cases, the poorer the country the higher is the percentage of average annual gross household income spent on rent.

Euroland · 28-03-2011 02:06PM

Amhran Nua wrote: »

In less developed countries people on average pay nowhere near 50% of their income towards rent.

We are talking about the averages, and in less developed countries people often pay 50-100+% of the national/regional average annual gross household income for the average national/regional annual rent. So, only relatively rich people can afford to rent or buy good-quality apartments or houses.

Amhran Nua · 28-03-2011 02:10PM

Listen, can you just copy-paste sections within posts rather than quoting points in new posts, it makes things much easier to read thanks.

Euroland wrote: »

These figures are coming from the International Housing Affordability Survey 2011, they may not be precisely correct with the numbers (I have spotted there some mistakes), but they give the flavor of it: almost all countries in the world have the affordability multiple of well above 3.

Once again, affordability means very little. Prices were far higher four years ago but they were still affordable, because the banks were willing to supply the money. They were terrible value however. If you want a good value indicator, rental returns are as solid as you're likely to get. That one bedroom apartment you were pointing at earlier is not great value at all, although most people could probably afford it.

Euroland wrote: »

With rent we usually would have a percentage of the average annual rent to the average annual gross household income. In most of the cases, the poorer the country the higher is the percentage of average annual gross household income spent on rent.

The majority of the very poor in developing countries pay zero rent, they just squat or live in shanties.

Euroland · 28-03-2011 02:21PM

Amhran Nua wrote: »

Once again, affordability means very little.

Affordability means a lot. It indicates that someone can afford to buy or rent some property from family income. It is the base (base of demand), and only then come to play other factors, i.e. supply, etc.

Euroland · 28-03-2011 02:26PM

Amhran Nua wrote: »

f you want a good value indicator, rental returns are as solid as you're likely to get.

As I said before, our rental prices are well below the levels that exist in most of other countries, so unless they grow to the proportionally similar levels, this ratio is useless, as it would always significantly discriminate our property prices.

Euroland · 28-03-2011 02:28PM

Amhran Nua wrote: »

That one bedroom apartment you were pointing at earlier is not great value at all, although most people could probably afford it.

There many countries where people on average gross household incomes cannot afford either buy or rent 1-bedroom apartments, renting studios instead.

Euroland · 28-03-2011 02:32PM

Amhran Nua wrote: »

The majority of the very poor in developing countries pay zero rent, they just squat or live in shanties.

You are taking us to the far extreme, whereas I’m talking about average people in poorer countries, i.e. Poland, Libya, Russia, Bolivia, etc. Or maybe you believe that all people in those counters live in shanty towns?

Amhran Nua · 28-03-2011 02:59PM

Euroland wrote: »

Affordability means a lot. It indicates that someone can afford to buy or rent some property from family income. It is the base (base of demand), and only then come to play other factors, i.e. supply, etc.

Not when you can manipulate affordability by easing up credit terms. Affordability means exactly what it says on the tin, no more and no less, and says nothing towards value.

Euroland wrote: »

As I said before, our rental prices are well below the levels that exist in most of other countries, so unless they grow to the proportionally similar levels, this ratio is useless, as it would always significantly discriminate our property prices.

Eh you cited figures from something calling itself the "Wendell Cox Consultancy", as far as I can tell, which is not a recognised body of any description, and has a website out of the early 90s. Also as far as I can tell you were talking about house price to household income levels, not rental levels. Its quite hard to be sure since their PDF stops downloading halfway through.

Euroland wrote: »

There many countries where people on average gross household incomes cannot afford either buy or rent 1-bedroom apartments, renting studios instead.

Yes but they haven't got the nineteenth century rental legislation we have here, although that has to some extent been improved a little.

Euroland wrote: »

You are taking us to the far extreme, whereas I’m talking about average people in poorer countries, i.e. Poland, Libya, Russia, Bolivia, etc. Or maybe you believe that all people in those counters live in shanty towns?

Okay, it seems you've come to your conclusion and then done the research to support it. Or you're heavily invested yourself, which is the usual case. Regardless, time will tell which is correct, and I'm pretty confident putting my money where my mouth is.

Again, please stop with the postcount++ thing.

K-9 · 28-03-2011 03:23PM

Euroland wrote: »

Here are just a few multiples:

Australia 7.1
Canada 4.6
China 11.4
New Zealand 6.4
United Kingdom 5.1
United States 3.3

And, usually, the further you go towards less developed countries, the higher is the multiple.
As regards to rent - similar story: in less developed countries people spend up to 50-100% of average gross household income on average rent.

This gives a better idea of how those countries are ranked internationally:

International housing comparison data « Ireland after NAMA

economist-rent-to-price-ratio.gif?w=417&h=626

economist-rent-to-price-ratio.gif?w=417&h=626

That was end of 08, into 09.

Euroland · 28-03-2011 03:32PM

K-9 wrote: »

This gives a better idea of how those countries are ranked internationally:

International housing comparison data « Ireland after NAMA

That was end of 08, into 09.

1) They (Economist) use completely different ratio (price-to-rent) and don’t measure affordability (price-to-household income), so you cannot compare them at all

2) As regards to our rents, please re-read everything what I wrote above (I said that our rents are artificially low, making the usage of price-to-rent ratio in Ireland completely useless).

shoegirl · 28-03-2011 03:35PM

Permabear wrote: »

This post had been deleted.

Well put, but you left out the fact that 1 in 4 adults cannot read or write.

The problem with focus on headline corp tax rates is that they only apply to companies in profit. The moment a company ceases to be profitable is the moment where Ireland goes into negative territory on benefits: hence the huge number of IDA backed concerns that arrive with a fanfare, fail to come anywhere beyond 50% of the promised jobs, and disappear quietly within a decade as soon as a loss occurs.

You can write off a lot of costs against profit, but there is nothing you can write off against a loss. Add to that obscene commercial rates (eg Brown Thomas pays 1 million a year to the corporation, regardless of whether or not it makes a cent), disastrous infrastructure (for example much of the country is still begging for copper based DSL: we are more than a decade behind the rest of the 1st world on fibre based services in most of the country), disaster planning that rightfully belongs in the 3rd world (http://www.cix.ie/blog/ is an interesting read in this regard - they give an example of a company who left Bandon after the 2009 flooding, I am sure this is only a tiny snapshot of businesses who suffered severe damage as a result of persistent weather damage in some regions).

Another issue is that (if David McWilliams is correct) up to 1/3 of companies "locating" here for tax purposes create no employment here at all, and our tax havan status depends heavily upon decision makers in the US and UK continuing to turn a blind eye to global repatriation of profit for tax purposes or all of Kenny's advocacy in Europe will really be in vain. What Dr Merkel thinks about Ireland's tax rate matters nothing if the US finally do what they have been threatening to do for years and stop US companies from moving certain types of profit offshore to evade tax.

We have some advantages still in terms of proximity and overwhelming English speaking nature of the populace. These are things that do not erode. Ireland is not going to geographically fold up overnight and relocate to the Pacific. A young population should be a much more positive in our favour than it is. It is crazy that we are exporting younger people with an aging population.

Euroland · 28-03-2011 03:40PM

Amhran Nua wrote: »

Eh you cited figures from something calling itself the "Wendell Cox Consultancy", as far as I can tell, which is not a recognised body of any description, and has a website out of the early 90s. Also as far as I can tell you were talking about house price to household income levels, not rental levels. Its quite hard to be sure since their PDF stops downloading halfway through.

It absolutely doesn’t matter who they are, what matters is that they indicate the trend. If you have doubts, you can do it yourself, taking the average property prices and average gross household incomes for each country (city or region), one by one, and then complete calculations. And after completing it you would come up with the numbers more or less similar to the numbers I’d mentioned before.

K-9 · 28-03-2011 03:41PM

Euroland wrote: »

1) They (Economist) use completely different ratio (price-to-rent) and don’t measure affordability (price-to-household income), so you cannot compare them at all

2) As regards to our rents, please re-read everything what I wrote above (I said that our rents are artificially low, making the usage of price-to-rent ratio in Ireland completely useless).

Well that's the best I could get, can't find the one I was on about.

I think you should re read other posts, you haven't proved anything about low rents and have actually contradicted yourself on it.

Euroland · 28-03-2011 03:44PM

shoegirl wrote: »

if the US finally do what they have been threatening to do for years and stop US companies from moving certain types of profit offshore to evade tax.

When Obama threatened to do that Microsoft replied that they would simply change their company registration address and stop being an American company. Obama quickly withdrew from this idea.

Euroland · 28-03-2011 03:49PM

K-9 wrote: »

Well that's the best I could get, can't find the one I was on about.

I think you should re read other posts, you haven't proved anything about low rents and have actually contradicted yourself on it.

I didn’t contradict myself, if you wish; you can measure yourself the ratio of rent-to-gross household income for each country/city/region. And you would immediately notice that in Ireland tenants pay substantially less (as a percentage of their average gross household income) than in most of the other countries in the world.

K-9 · 28-03-2011 03:55PM

House prices in Europe remain above long-term average; Further price declines likely in Spain, Ireland, the Netherlands, Italy and France

Decent article from 2010, showing the rises to 06, the UK being expensive and we only now are starting to get interest rates rises with more to come.

maninasia · 28-03-2011 04:03PM

Euroland wrote: »

How about Australia and Norway then? The property prices over there almost twice above ours. How about Singapore or Hong Kong?

Australia is starting it's bust RIGHT now. Hong Kong is going through it's usual bust and bubble cycle. There is always somewhere bubbling and busting..cycles my friend. If you have visited HK or Singapore you will see that they have huge amounts of wealthy financial folks and immigrants from China and elsewhere, plus they are tiny territories/countries, not a valid comparison.
Norway is one of the richest countries in the world per head due to it's oil reserves.

Why bother investing in Ireland?

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