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29 Jul 2016

Friday Tidbit: Ireland’s Housing Collapse

We are struggling to find value at present with all assets classes moving into expensive territory.

For example, interest rates are so low in the developed world that bond prices have been stretched to the highest level in recorded human history. This can only mean massive capital loss when interest rates begin to mean revert back to some kind of long term average.

Share prices are also stretched to all-time highs in the United States which is in the eighth year of a bull run that began in March 2009 (after the Global Financial Crisis). All booms end in a bust and the eventual stock market crash in the United States will cause massive capital loss across all global share markets.

What about property? Prices in Sydney are ridiculous on any measure and the Australian experience of easy credit, speculation and slow property supply draws direct parallels with Ireland but in Ireland’s case residential property prices are still 33% below their peak in 2007.

In the absence of value it is best to keep repaying debt or just save and wait for the catastrophe because it will come and when it does come investors will be given a new buying opportunity to accumulate more quality assets.

WARNING, past performance is no guarantee of future performance and most importantly, the above comments do not constitute Personal Advice.


At Newealth we are always looking to support and promote our clients wherever possible and if you have any ideas or comments, please feel free to email me or to call me on +61 2 9267 2322.

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