Obsession - englightenment please!

megadodge

When have the Olympics ever raised the prices of properties in a host city?

I know it's a number of posts back and off-topic but I just couldn't let such a startingly ignorant quote go unchecked.

Maybe people should do a little homework before they start spouting rubbish that is actually the complete opposite to the truth !


Here's a link

http://news.bbc.co.uk/1/hi/business/4656927.stm

and there are any amount of others if you just google 'Olympic effect on property prices' and words to that effect.

soma

iguana wrote:

Soma specified somewhere urban.

Perhaps I should have specified somewhere Urban and livable. I find it interesting that Iguana had to resort to using corporation estates in Stab City. Speaks volumes. :rolleyes:

Also saying that what happens to the market in Dublin has no impact on the rest of the market.. displays no understanding of City-State economics.

soma

iguana wrote:

What is someone going to do with £20k that will guarantee at least 10x that investment over 30 years.

Absolutely no comment. Although the word 'gibberish' springs to mind..

iguana wrote:

but there is also a big chance that over 30 years the house will be worth more than £195k.

Meaningless without taking inflation into account.

They wouldn't be saving anything monthly by renting.

Boy I guess all that cash just 'appeared' by itself in my savings & investment accounts, great.

iguana wrote:

However while over 30 years their mortgage repayment will remain constant

Only a negligible amount of Irish people use fixed rates, and interest rates are still ultra-low.

in 30 years the odds are the rent will just rise and rise.

Again meaningless, without taking into account wage inflation this time.

iguana wrote:

My grandmother was paying something like £2 a week in her mortgage which in the mid-80's when she finished paying it was a negligible amount of money.

Sweet jesus someone get this woman a dictionary, preferably opening it on the page containing the word 'inflation'.

Kinetic^

Let's say you've got 2 people. 1 rents and invests whereas the other buys.

First person's investments after 25 years, goes belly up and is still renting.

Second person's house value crashes to nothing after 25 years(only an example) and there is no mortgage outstanding.

Which person would you like to be? I know it's an extreme example before anyone says it.

I'd rather be the person with no mortgage and a roof over my head rather than the guy with a few share certificates. It's about security. That's why so many people buy houses instead of renting.

Afuera

megadodge wrote:

I know it's a number of posts back and off-topic but I just couldn't let such a startingly ignorant quote go unchecked.

Maybe people should do a little homework before they start spouting rubbish that is actually the complete opposite to the truth !


Here's a link

http://news.bbc.co.uk/1/hi/business/4656927.stm

and there are any amount of others if you just google 'Olympic effect on property prices' and words to that effect.

You don't do yourself any favours by linking to a report originating from one of the UKs biggest mortgage lenders. The "Olympic effect" is a term coined for pure spin and has actually no basis in reality. Failing to recognise that is ignorance of the highest order.

If you look at any country that has had a trend of rising house prices the gains in the major cities have always outstripped the gains on a national level. The countries mentioned in this report from Halifax were all experiencing a trend of national price rises during the dates mentioned.

If you think that London house prices are somehow protected from falling, just because they're holding the Olympics in 2012, then you seriously need to get your head checked.

Afuera

Kenny 5 wrote:

Let's say you've got 2 people. 1 rents and invests whereas the other buys.

First person's investments after 25 years, goes belly up and is still renting.

Second person's house value crashes to nothing after 25 years(only an example) and there is no mortgage outstanding.

Which person would you like to be? I know it's an extreme example before anyone says it.

I'd rather be the person with no mortgage and a roof over my head rather than the guy with a few share certificates. It's about security. That's why so many people buy houses instead of renting.

I see where you're getting at but I don't think you're taking into account the number of diverse investments that someone with a lot of spare liquidity could have. The golden rule of investing is "not to have all your eggs in the one basket" so the situation you describe for the first person is very unlikely to arise.

If we want to think more about extreme examples, we could take the case where after ten years there is a serious global recession and both people lose their jobs. Who would you rather be now?

iguana

soma wrote:

Perhaps I should have specified somewhere Urban and livable. I find it interesting that Iguana had to resort to using corporation estates in Stab City. Speaks volumes. :rolleyes:

Read back, the examples I used were of two private developments of houses built in the 90's. Which are by the way in a city with less serious crime per capita than Dublin or Cork. 7 and a half times less, per capita than Dublin. http://www.garda.ie/angarda/statistics/report2005.html

If your level of argument is making ill-informed denegrating statements about peoples homes then your arguments aren't up to much.

Kinetic^

Afuera wrote:

I see where you're getting at but I don't think you're taking into account the number of diverse investments that someone with a lot of spare liquidity could have. The golden rule of investing is "not to have all your eggs in the one basket" so the situation you describe for the first person is very unlikely to arise.

If we want to think more about extreme examples, we could take the case where after ten years there is a serious global recession and both people lose their jobs. Who would you rather be now?

I agree with all of the for and against arguments........the point is......everyone's taking a risk........everyone on here thinks they're right......there is no right or wrong answer atm......only time will tell.

While the Olympics may or may not affect prices, the change in transport infrastructure will.

Personally I think the thread should be locked as it's getting out of hand.

iguana

soma wrote:

Boy I guess all that cash just 'appeared' by itself in my savings & investment accounts, great.

I was talking about a specific choice between the two housing examples I used. I sure haven't noticed a big difference between €900pm and €900pm.

soma wrote:

Again meaningless, without taking into account wage inflation this time.

My grandmother's mortgage payment was £2 a week from when she and my grandfather bought the house in 1963. I think my grandfather earned about £12 then. So the mortgage accounted for roughly 16% of their income. In the 80's she was still paying £2 and her pension was I think £65 at that time. So she was paying about 3% of her income on accomodation.

That point is all about wage inflation. People renting in the area for £40 a week were going to be earning more than £15 but they weren't earning £1220 a week which is what they would have needed to be earning to have the same income to accomodation ratio as my grandmother.

Soma wrote:

Sweet jesus someone get this woman a dictionary, preferably opening it on the page containing the word 'inflation'

I think you are the one who need to get a dictionary. Or math lessons.

Ok, again using my example;
Two couples move into each house. One pays €900pm rent. The other €900pm mortgage repayments. They both earn, say, €2700pm. So they are each paying a third of their income on housing.

10 years pass, inflation has risen by 33%* . They each now earn €3600pm. Rents have risen with inflation and is now £1200pm, still a third of the monthly income of the renters. However the mortgage payment remains constant and is still €900pm. Therefore the mortgage payment is now one quarter of the income of the homeowners.

*That is not a prediction, just a figure that makes the math easy.

SkepticOne

I think what has happened in Ireland (and also Britain) is that people have become blind to the downside risks. They look at the capital appreciation of the last few years and simplistically assume that this trend can only continue. Compare this with Germany where there has not been such gains and you can understand the difference in mentality.

hmmm

Kenny 5 wrote:

First person's investments after 25 years, goes belly up and is still renting.

Second person's house value crashes to nothing after 25 years(only an example) and there is no mortgage outstanding.

As mentioned here, first rule of investing is don't lose it all when something goes wrong. Most investors have % allocated to various asset classes and tries to minimise correlation, something most property "investors" don't understand.

Let's try a different example - property has increased in value by around 1% a year over the past 100 years (ref Malkiel). The (US) stock market has averaged around 10%. Where would you rather have the money that pays for your retirement?

hmmm

iguana wrote:

Ok, again using my example;
Two couples move into each house. One pays €900pm rent. The other €900pm mortgage repayments. They both earn, say, €2700pm. So they are each paying a third of their income on housing.

You're not comparing like with like. Rental yields are running at about 2-3% (max) in Dublin at the moment. In your example, for an identical property the rent would be about half of the (repayment) mortgage.

Your example in reality would be "Renter A is renting a nice apartment in the city centre for €900 from which he walks to work and enjoys an active social life, whereas purchaser B is commuting 5 hours a day from a small house in Mullingar in which he has 1 room rented out to a stranger and on which he pays €900. After 10 years, who will be the happier?"

megadodge

Afuera wrote
When have the Olympics ever raised the prices of properties in a host city?

That was your original statement (phrased as a question), which basically suggests that the Olympics have NO effect on prices of properties in a host city.

I give you the very first example I googled up, telling you that there are numerous other links all showing that YES the Olympics and more importantly, the billions that are invested in the city's infrastructure as a result of hosting the Olympics (not to mention the millions of extra people visiting as a result of the showcase) do indeed have a very positive effect on the city's property values and you dismiss it all as mere spin and coincidence ! Wow !

Add this in to the fact that the Financial heart of the City has just recorded record bonuses (over £4billion) and London has a serious undersupply of property in relation to demand and more people are entering the country than leaving/dying and after a rather stale few years where London property inflation was below the national average, in 2006 it outperformed all other areas in the country and I think I'm way, way closer to the mark in saying that the Olympics will cause a serious rise in London property prices over the next 5 years than you are in telling me to get my head tested because I think that !!

I know I'm not going to teach an old pessimistic dog new tricks, so rather than tell me why I'm in for an awful rude awakening (no doubt based on fact rather than your negative outlook) I guess we'll just have to wait til 2012 and see which one of us was right. Suits me fine.

soma

iguana wrote:

I was talking about a specific choice between the two housing examples I used. I sure haven't noticed a big difference between €900pm and €900pm.

For 99% of people who will simply not live in these areas, your argument is rubbish.

The fact remains that mortgages and rents have diverged to truly astounding levels.

Whether you like it or not (and Im speaking as someone who *hates* Dublin and is way happier when in non-leinster counties) this country is completely dominated by and completely dependent on Dublin. "Equity locusts" (as my US property investor buds would refer to them) have helped to dramatically ramp up prices in these counties.

The price drops awaiting Dublin are very large - but the plummets the rural areas will see will be astounding.

One last thing here, I have actually completely lost interest in actual price of houses in this country because the elephant in the room is that the economy is an absolute shambles, built on nothing but asset speculation and a consumer binge.

You only have to keep an eye on the papers to see the 'death by a thousand cuts' that is happening. Mark my words, motorola's announcement yestrerday will be followed in the short term by Vodafone, Xerox & Pfizer. And In the medium term by Dell & Intel.

When the tide goes out, we find out who's been swimming naked.

jesus_thats_gre

megadodge wrote:

I know it's a number of posts back and off-topic but I just couldn't let such a startingly ignorant quote go unchecked.

Maybe people should do a little homework before they start spouting rubbish that is actually the complete opposite to the truth !


Here's a link

http://news.bbc.co.uk/1/hi/business/4656927.stm

and there are any amount of others if you just google 'Olympic effect on property prices' and words to that effect.

I think the Olympics is one fo the contributing factors in the housing boom and recent fizzling out of Sydney's housing market also.

Afuera

megadodge wrote:

That was your original statement (phrased as a question), which basically suggests that the Olympics have NO effect on prices of properties in a host city.

And my question still stands... You've failed to show me a single objective report to support the "Olympic effect" on house prices. Any of the reports I've seen on this suggest that these rises would have happened anyway, Olympics or no Olympics.

megadodge wrote:

I think I'm way, way closer to the mark in saying that the Olympics will cause a serious rise in London property prices over the next 5 years than you are in telling me to get my head tested because I think that !!

I know I'm not going to teach an old pessimistic dog new tricks, so rather than tell me why I'm in for an awful rude awakening (no doubt based on fact rather than your negative outlook) I guess we'll just have to wait til 2012 and see which one of us was right. Suits me fine.

Don't say that nobody told you so then if things don't work out as you planned!

Afuera

jesus_thats_gre wrote:

I think the Olympics is one fo the contributing factors in the housing boom and recent fizzling out of Sydney's housing market also.

Have you got anything that compares the housing boom in Melbourne with that of Sydney during the same period? I'd suspect that the "contributing factor" of the Olympics would be negligible.
I think that the fizzling out of the housing boom there had more to do with the fact that they had to raise their home lending interest rates up to 8%.

soma

soma wrote:

You only have to keep an eye on the papers to see the 'death by a thousand cuts' that is happening. Mark my words, motorola's announcement yestrerday will be followed in the short term by Vodafone, Xerox & Pfizer. And In the medium term by Dell & Intel.

Ok my timing was impressive/flukey[delete as appropriate]. But Vodafone are now officially on the band wagon:

RTE.ie wrote:

Vodafone seeks 100 voluntary redundancies
Wednesday, 31 January 2007 12:27

The mobile phone group, Vodafone, has confirmed that it is seeking 100 voluntary redundancies at its Dublin headquarters.

A newspaper report this morning said the company told employees last week that it was responding to an increasingly competitive Irish mobile phone market.

The company employs around 1,800 people in the Republic.
Advertisement

The news came as Vodafone said it added 59,000 Irish customers in the three months to the end of December, bringing its total subscriber base to 2,178,000.

Despite this increase in subscription, the amount of money it takes from each customer continued to fall.

Average monthly revenue per user was €45.60, down from €46.90 at the end of September and €50.20 in the same period last year.

This is still well above the equivalent figures in its other main European markets.

ronbyrne2005

soma wrote:

Ok my timing was impressive/flukey[delete as appropriate]. But Vodafone are now officially on the band wagon:

Announced today 200 high end jobs going in limerick to add to the 300 in Motorola in Cork and Dell will soon be leaving too.

Afuera

Afuera wrote:

Have you got anything that compares the housing boom in Melbourne with that of Sydney during the same period? I'd suspect that the "contributing factor" of the Olympics would be negligible.

Ok, I managed to track down the actual statistics for this from the Australian Bureau of Statistics (http://www.abs.gov.au/AUSSTATS/abs@.nsf/second+level+view?ReadForm&prodno=6416.0&viewtitle=House%20Price%20Indexes:%20Eight%20Capital%20Cities~Sep%202006~Latest~15/11/2006&&tabname=Past%20Future%20Issues&prodno=6416.0&issue=Sep%202006&num=&view=&).

The following figures represent the annual change in house prices in Melbourne and Sydney and I've taken them from 5 years before, until 5 years after the Olympics which were held in 2000.

Just to make it interesting, I've left out which is which... Can you spot the "Olympic effect"?

City A
1995 +2.5%
1996 +2.4%
1997 +5.9%
1998 +9.5%
1999 +10.7%
2000 +5.9%
2001 +17.2%
2002 +22.4%
2003 +15.5%
2004 +0.0%
2005 -3.9%


City B
1995 -0.6%
1996 +4.0%
1997 +12.2%
1998 +9.8%
1999 +15.2%
2000 +9.7%
2001 +20.6%
2002 +12.5%
2003 +12.5%
2004 -1.5%
2005 +2.9%


Hint:
City A = Sydney
City B = Melbourne