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Softening house market?

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    #752
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    https://www.boards.ie/discussion/comment/119200608#Comment_119200608

    Certainly won’t be in my bank account!



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    #753
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    https://www.boards.ie/discussion/comment/119200565#Comment_119200565

    Sorry buddy, not biting



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    #754
    awec
    Administrators Posts: 53,740 Admin ✭✭✭✭✭awec


    https://www.boards.ie/discussion/comment/119200608#Comment_119200608

    I'm not sure if you're being serious or not but the actual number written on the front of the bank note in your piggy bank is irrelevant. What is important is the real value of this.

    The amount of cash you have in the bank needs to increase at least equal with the rate of inflation for you to break even. If your nominal value of cash remains constant then you are realising a loss.

    Obviously no bank is paying out interest anywhere near inflation levels, so a loss is pretty much guaranteed.



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    #755
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭handlemaster


    https://www.boards.ie/discussion/comment/119200280#Comment_119200280

    Cash isn't risk free. As point out inflation. How much a euro buys now will not be as much as it buys in 1 year. Currency fluctuate all the time relative to market supply and demand.



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    #756
    WacoKid
    Registered Users Posts: 433 ✭✭WacoKid


    Cash has been shown to not time travel your wealth well over the longer term, gold is better. Land or property are better again for time travelling wealth but come with the minor cost overhead of upkeep, taxes etc. Bitcoin is positioning itself as the best time traveller for your wealth...but thats for another day 😂



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    #757
    Donald Trump
    Registered Users Posts: 19,392 ✭✭✭✭Donald Trump


    https://www.boards.ie/discussion/comment/119200836#Comment_119200836


    lol on the Bitcoin claim. Something that cost you 1 bitcoin about 6 months ago will cost you 3 bitcoin today.



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    #758
    Buddy Bubs
    Registered Users Posts: 3,709 ✭✭✭Buddy Bubs


    House on my road just went on property price register this week for higher than I believe any did during the celtic boomer. By 6k. Identical houses, 3 bed semis, Dublin suburbs, nothing special but I didn't think they ever reached this figure before.

    I'm currently looking to trade up/sideways and although my equity is now bigger than I expected it to be, trading is still a huge challenge due to lack of availability and high prices on the other side.



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    #759
    DFB-D
    Registered Users Posts: 340 ✭✭DFB-D


    https://www.boards.ie/discussion/comment/119200655#Comment_119200655

    Deadly serious.

    In finance cash and US bonds/other government bonds are counted as risk free. The risk they carry cannot be eliminated.

    You may desire to make a return but inflation hits all investments equally regardless.

    E. G.

    cash 100, next year 100 guaranteed.

    Gov Bonds 105 guaranteed in 2 years = risk free

    Property 100 - potential high 110, potential low 90 = risk..

    If inflation runs at 10%, as you have mentioned, things cost 10% more next year. But to counter this you expose yourself to risk. The risk is that your investment will fall below 100, which cash will not.

    If you do not invest = no risk.


    BTW major sell offs of stocks/ investment property is occurring at the moment, when stop losses kick in, investment companies default to cash or bonds to limit the losses from falling investments.


    This is not personal opinion, it is the reality of the calculations done daily by investors. If anyone else doubts this look at capm. or similar investment decision models.



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    #760
    WacoKid
    Registered Users Posts: 433 ✭✭WacoKid


    Goverment bonds not great. Say 5% return on your money in 2 years. But inflation runs at 5% for both these years so its a -10% hit. To realise your 5% you thought you were getting, the bond would actually have to pay 15%.



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    #761
    awec
    Administrators Posts: 53,740 Admin ✭✭✭✭✭awec


    https://www.boards.ie/discussion/comment/119200901#Comment_119200901

    I think you're arguing a technicality / technical definitions vs real world here. Cash may not fall below 100 in nominal value but in real terms you can still realise higher losses than you otherwise would if you were not holding cash.

    In reality, in terms of the amount of spending power that you as an investor hold, cash is not without risk. Nothing is without risk. Inflation will destroy your wealth fairly quickly if you have it stuck under the mattress, at this moment in time this is pretty much a guaranteed way to lose money. Losses you are very unlikely to ever get back, since the real value of cash tends to only move in only one direction.

    To convert your property assets into cash right now is betting that the real value of your property is going to fall by more than inflation is going to destroy the real value of the cash you get from selling it. Of course, it's more nuanced than this, as you need to account for how long term your view is, when you will want to realise any gains (e.g. if you have a second house that you are planning to use to finance your retirement in 20 years, selling it right now to stick the money in the bank is probably a terrible and very risky financial decision).



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    #762
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    https://www.boards.ie/discussion/comment/119200901#Comment_119200901

    All I can do is facepalm at that post

    if you want to keep a big cash balance in a high inflation environment, go for it



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    #763
    Wanderer78
    Registered Users Posts: 29,273 ✭✭✭✭Wanderer78


    https://www.boards.ie/discussion/comment/119200996#Comment_119200996

    bitcoin it is so! that you elon!



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    #764
    WacoKid
    Registered Users Posts: 433 ✭✭WacoKid


    https://www.boards.ie/discussion/comment/119201238#Comment_119201238

    Not at all! We are just discussing how your wealth may be affected based on where you place it.

    Bitcoin is manovering itself as a decentralised store-of-value asset, not a currency. To note, I do not own Bitcoin and never have!



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    #765
    Wanderer78
    Registered Users Posts: 29,273 ✭✭✭✭Wanderer78


    https://www.boards.ie/discussion/comment/119201336#Comment_119201336

    ...only that it potential is the most risky store of value one can find, and is heavily manipulated.... its a bust, but shur it was always gonna be a bust.....



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    #766
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭handlemaster


    Here we go. No ECB rate rise yet. Mortgage rates are already going up..


    https://m.independent.ie/business/personal-finance/property-mortgages/finance-ireland-the-third-lender-to-increase-mortgage-rates-41751006.html



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    #767
    Wanderer78
    Registered Users Posts: 29,273 ✭✭✭✭Wanderer78


    https://www.boards.ie/discussion/comment/119201453#Comment_119201453

    ...inflation expectations....



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    #768
    awec
    Administrators Posts: 53,740 Admin ✭✭✭✭✭awec


    https://www.boards.ie/discussion/comment/119201453#Comment_119201453

    That's because it's expected increases that cause banks to raise their rates, not the increases themselves.

    These new rates will be pricing in the forecast increases that have been talked about.



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    #769
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭handlemaster


    https://www.boards.ie/discussion/comment/119201481#Comment_119201481

    Of course. .25 increase for july 1 % rate increase. .50 increase for September



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    #770
    DFB-D
    Registered Users Posts: 340 ✭✭DFB-D


    https://www.boards.ie/discussion/comment/119201129#Comment_119201129

    Good, smack yourself nice and hard a few more times :)

    —--------—----

    THEORY

    Investment = risk.

    No investment = avoid risk.

    Inflation = unavoidable.

    Loss on investments = avoidable but forgo gains if available.

    -----------------

    ACTUAL

    Current stock market = massive sell off

    EU/ US property = massive sell off in progress

    Interest rates rising to dampen spending

    Irish property - High risk of following above.

    --------------------

    What should I invest my large cash balance in so I achieve 10%?

    What your investment idea follows the stock market and falls massively?

    Short of it is, possibly now is the time to sell if you plan to sell within the next 10 years.



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    #771
    Wanderer78
    Registered Users Posts: 29,273 ✭✭✭✭Wanderer78


    https://www.boards.ie/discussion/comment/119201643#Comment_119201643

    ...yup, those profits need to be made at all costs, and just encase theres a rise in defaults and non performing loans.......



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    #772
    awec
    Administrators Posts: 53,740 Admin ✭✭✭✭✭awec


    https://www.boards.ie/discussion/comment/119201645#Comment_119201645

    Your theory is flawed, inflation is not unavoidable. You can minimize your exposure to inflation.

    Selling now to convert to cash is betting that the real value of your property is going to fall by more than inflation will destroy the value of your cash. IMO, for a 10 year outlook this is a very questionable decision.



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    #773
    DFB-D
    Registered Users Posts: 340 ✭✭DFB-D


    https://www.boards.ie/discussion/comment/119201781#Comment_119201781

    You are missing the point.

    Even with gains, inflation still happens. You haven't avoided it, you have less spending power than of inflation had been 0%.

    Look using your example, in which you have made an error, a loss on property prices adds to the effect of inflation. Only if you make a gain will you do better than keeping the balance in cash.

    10 year outlook from today is not good. Better to buy when the prices are lower and the risk of further price decreases are lower. Not easy to figure that out, but point is it looks like property is stagnating, if I buy next year at 20% less than current prices, or 40% less in the year after, I avoid those losses and possible capture the gain assuming the losses are reversed.



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    #774
    awec
    Administrators Posts: 53,740 Admin ✭✭✭✭✭awec


    https://www.boards.ie/discussion/comment/119201946#Comment_119201946

    Ok, I see what you are saying, but I still feel it is a flawed view and is based on the bet that property values are going to fall significantly in the short term.

    Absolutely nobody knows what the 10 year outlook is and anyone who pretends that they do is a total bluffer. But we do know that generally, property is a good long term bet and cash is not.



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    #775
    DFB-D
    Registered Users Posts: 340 ✭✭DFB-D


    https://www.boards.ie/discussion/comment/119201999#Comment_119201999

    Absolutely, no one knows, and I do have investments in property I won't sell as I have no intention of selling..

    But buying now seems like craziness.

    Of course I could be wrong and hopefully I am. But I don't think there will be gains either way for the remainder of the year, so I'll hold off buying a new property for the moment.



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    #776
    awec
    Administrators Posts: 53,740 Admin ✭✭✭✭✭awec


    https://www.boards.ie/discussion/comment/119202243#Comment_119202243

    I honestly don't know what I'd do right now if I had the money sitting there to buy an investment property.

    But in terms of buying a house to live in, it's a totally different story.



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    #777
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭handlemaster


    People who wanted to sell or need to sell should sell now. I dont see prices moving up to many headwinds



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    #778
    Ozark707
    Registered Users Posts: 949 ✭✭✭Ozark707


    One page of price changes on myhome today for Dublin. 13 of the 14 were drops. A few weeks back there would have maybe been 6-8 changes in a day with roughly the same amount of rises as drops.



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    #779
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    People are still saying that crypto is a hedge against inflation and/or downturns?

    😂



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    #780
    maninasia
    Registered Users Posts: 4,616 ✭✭✭maninasia


    Cash buyers are reducing because ireland isnt as attractive a place to move back to as it was. Signed...potential returnee cash buyer. Value isnt as great obviously (500k for ex small old council houses in Dublin now) but sentiment in Ireland is really **** right now and its not just housing I'm talking about. Except for currently plentiful jobs its wall to wall doom and gloom. Honestly Ireland is becoming quite unattractive to move back to, tax and cost of living is savage you need massive mkney to match the lifestyles of some countries overseas.



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    #781
    maninasia
    Registered Users Posts: 4,616 ✭✭✭maninasia


    While inflation eats away cash investors in stock markets have lost WAY MORE over the last few months. Most Irish people dont invest in much stocks so its less in the news in Ireland. Stock and crypto holders will not have the same cash available as before, as I know myself.



This discussion has been closed.
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