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CrashConnoisseur

Mcwilliams: Exposing The Lie Of The Land.

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Another reality check from David McWilliams...

'Exposing the lie of the land':

http://www.davidmcwilliams.ie/2009/05/11/e...lie-of-the-land

The Irish house, at a ‘bargain’ price of €335,000, is still more than 53 per cent overvalued. It will have to fall by half again to make the sums ad up.

The real fair value means that, in a world where house price speculation is over, Irish house prices will have to fall on average by 50 per cent from where they are today to be worth buying. Madly, even after a year of house price contraction, the P/E for the average Irish house stands at over 29 times - twice the historical average for property.

So, let’s snap out of it. Why can’t we just mark down prices to where they should get to, take the bankruptcies and move on?

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>Why can’t we just mark down prices to where they should get to, take the bankruptcies and move on?

The system cannot take those losses all at once. The government would go bankrupt as it has backed the banks.

VMR.

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bizarre, isn't it... i always thought that we brits were the the most pwoperdee-obsessed nation on the planet... but it seems that the irish beat us at our own game.

a P/E of 29 means a gross rental yield of about 3.4%... which is astonishingly low... in the UK you'd probably only tend to find a yield that low on housing types that people tend not to want to rent in very large numbers [e.g. big/expensive family homes?], or perhaps in areas where relatively few people want to rent [e.g. a town with no university].

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I loved this quote from the comments section...

To paraphrase the Upton Sinclair line - it is virtually impossible to get all those involved in ‘property’ in this country to understand the reality when their salary depends on them not understanding!

Now I see where McHamish and Sibley are coming from :lol::lol::lol:

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I was in Dublin about 5 years ago and the taxi driver told me that her parents' house, 2 up 2 down, had had an offer of 500K Euros on it. I was staggered.

I was even more staggered when she told me that they could not accept as they were looking to move out of Dublin further down the East coast and that the 500K would not be enough for them to buy a house where they wanted.

The taxi driver thought it was all mad but seemingly she was the only sane person in Eire at the time.

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The whole friggin Island is between a rock and a hard place. Apparently the yoof are using Facebook to network and find jobs abroad. 2 of my cousins have just left again after returning for what they thought would be forever 3/4 years ago. Very sad.

Not so sure about McWilliams. I guess he's wants a kind of offshore 'Hong Kong' in Ireland (90% of the population are fecked with around 10% living a life of plenty then?).

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I was in Dublin about 5 years ago and the taxi driver told me that her parents' house, 2 up 2 down, had had an offer of 500K Euros on it. I was staggered.

I was even more staggered when she told me that they could not accept as they were looking to move out of Dublin further down the East coast and that the 500K would not be enough for them to buy a house where they wanted.

The taxi driver thought it was all mad but seemingly she was the only sane person in Eire at the time.

Sounds like they were heading for a posh part of Co. Wicklow perhaps?

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Sounds like they were heading for a posh part of Co. Wicklow perhaps?

Not sure - can't recall.

Alot of the b*ggers ended up coming across the sea and buying in Pembs/S'sea and hence contributed to the Welsh bubble also.

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Not sure - can't recall.

Alot of the b*ggers ended up coming across the sea and buying in Pembs/S'sea and hence contributed to the Welsh bubble also.

I used to know one of Dublin's biggest developers who used to come over with wads of cash - rolled up 50s - hundreds of them - and buy with cash. Really. Not anymore. No more money. It's over for good.

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I used to know one of Dublin's biggest developers who used to come over with wads of cash - rolled up 50s - hundreds of them - and buy with cash. Really. Not anymore. No more money. It's over for good.

Gone back to potato farming has he? There must be hundreds of ex investors, bankers and developers who were millionaires last year and who are now back to the farming or, in Iceland, the fishing.

One day you are a king of hedge funds, the next you are gutting a herring!

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Gone back to potato farming has he? There must be hundreds of ex investors, bankers and developers who were millionaires last year and who are now back to the farming or, in Iceland, the fishing.

One day you are a king of hedge funds, the next you are gutting a herring!

Actually most of the Icelandic 'Vikings' are living a life of luxury in tropical climes on their stolen money. The 99% of the remaining population are left with the bill - and blaming everyone but themselves.

Edited by Peter Hun

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Gone back to potato farming has he? There must be hundreds of ex investors, bankers and developers who were millionaires last year and who are now back to the farming or, in Iceland, the fishing.

One day you are a king of hedge funds, the next you are gutting a herring!

I would imagine they all have huge pots stashed away. The super wealthy never lose.

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Anyone know the P/E for UK houses?

price divided by after tax earnings - so assume a 5% gross yield, lose 10% of income for costs, tax the balance at 25%, leaves 3.375% net yield, gives 29x. The stockmarket trades on about 12x. Rents have to rise 150%, or prices fall 60%.

Those who buy houses as an inflation hedge, bear in mind equities are an inflation hedge, but less than half the price.

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Oi'd be likin' tae buy yer house, Paddy, but Oi'm told that it's 50% overvalued.

In that case Oi'll double the price, Seamus.

Well Oi can hardly ask fairer than that, Paddy. Done !

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