Property is the new gold..............

The Galway Sherry Fitzgerald franchise getting desperate.

advertiser.ie/galway/article … ve-to-gold

Tony Kavanagh, managing director, Sherry FitzGerald Kavanagh:

I see what you did there Tony. Very, very nicely done my man.

Can anyone find an online copy of the full-page ad SF took out just as the market was turning ?

The one that claimed property was as solid as … errr … houses and that in 30 years a 1 bed in Leitrim would be worth a trillion euros.

At least I think that’s what the ad said.

Man who makes his living selling houses says houses are great investment shocker!

Hmmm
There are so many flaws in this I am not sure where to start!

1] Gold is limited in supply…Property is NOT

thats the whole rationale behind owning Gold for the last few thousand years. Property is NOT limited in supply. In fact, if Ireland reaches Britains property denisity levels then we would have to have 4x the current amount of housing stock. Tried to build into that path already…it didnt work. Funnily enough there were no people to occupy the homes!

2] Government Bonds are one of the **best performing **asset classes of the last 10 years

That’s of course if you are talking about the bonds issued by sensibly run G7 countries like Germany, US, UK, Japan, Canada, France. Naturally, the bonds of Ireland have collapsed, but that’s because the country is full of people who will eternally call property the worlds best asset class and the Irish bond market has had to shoulder the burden of those mistakes

If G7 Government bonds start to do badly, it will be because interest rates are sky-rocketing and I suspect property will not be a safe haven in that environment

3] Irish Property is not that cheap

Relative to other cities like Boston, Frankfurt etc, its arguably still expensive
Relative to Incomes its close to Hist. averages (averages when the country was in better shape)
Relative to High Yield bonds its expensive, 9% yield
Relative to Global Equities its expensive, 8% Earnings Yield

Yet again the author is obviously referring again to Irish equities which have been destroyed…but thats because they were just another way to get exposure to Irish property (in a leveraged manner), heavily indexed to Irish banks

The S&P 500 is only 15% off its ALL TIME HIGHS!! Not that shoddy really

So yes, **if you only “Buy Irish” when you invest, you are indirectly buying property through the back door **and you will have lost money

4] “Gold is unaffordable”

Relative to what? Its such a meaningless statement
Just because something has gone up in value does not make it expensive
Just because something has down in value does not make it cheap

Relative to Credit Growth since the 80s, Gold needs to 2.5x from here to be back at the historical highs.

Now, I am not saying Property has no place in a diversified portfolio…because it does. And I would agree with the ‘tangible’ / easy to understand argument that will appeal to a lot of people and as such allow the asset to trade a bit more expensive than other assets
But, to compare Property to Gold is just ridiculous on so many levels. May as well compare Property in Dublin to property in Mayfair/ Manhattan (oh, sorry, forgot they already did that in 2007!)

confoundedinterest.wordpress.com … d-economy/

This fellow sees US property being 7% above historic bottom priced in gold. Not the same thing as Ireland, factors are a lot different.

Galway is Different and so sez Sherry Fitz so it must be true.

looking at the recent “correction” in the price of gold, I’d say that “Gold is the new property” :laughing: