Dave’s Rants

It’s been facinating watching the comments related to house prices in Ireland over the past few months. A few months ago it was almost unheard of in the media to express the opinion that house prices were too high and that we might be in a bubble but thankfully this irrational exuberance has been replaced with far far more bearish talk over the past few months. I’m sure this will please Mr. Potato, one of the few bloggers who’s posted about it.

Today Davy’s stockbrokers released some numbers that even I who am jaded from the continuing insane numbers in the Irish housing market were shocked by.

Davy stockbrokers has added its voice to the siren calls that Dublin house prices are now fully detached from reality by claiming that prices are heading for 100 times their rental income.

According to research conducted by Davy economist Roassa White, since April 2001 house prices are up 52 per cent on average nationwide but rents are down 2 per cent. As a result, yields have been driven down to unprecedented depths.

“Something does not feel right” Mr White writes.

“A line frequently trotted out by estate agents is that ‘buy-to-let investors are not worried about rental yield; they are in it for the long haul of capital appreciation’. That is fundamentally unsound investment advice,” according to Mr White.

Good God, this is going to be one mega hangover when this all comes crashing down.