In the 2006 book Loot I’d identified the Irish market as in a bubble but also identified the US as vulnerable, advising readers to reduce debt to under 50% of property values, shift cash to AAA rated Banks because bank busts were a risk, sell equities in favour of investing in bonds and, hold some gold. As explained in The Pivot, released exclusively through www.jackandjill.ie in December 2017, what I didn’t see was the global financial crisis, carried through the wiring of the global financial system and so thought certain property markets like Germany would be reasonable sectors.
This clip from the RTE Satire30 Things to deal with your SSIA addressing Irish property has occasionally been referred to on-line as one of the 30 things. In it I address bubble scepticism by using an audience exercise to reach the conclusion that, with Irish Rental Yields falling well below borrowing costs (3% vs 5%), Irish Residential Investment Property was “NOT A GOOD IDEA”. Quite how this was twisted into the opposite ie into recommending Irish RIP has never been clarified, save being hard of hearing.
This chimed with my concurrent 2006 book Loot for Jack & Jill. The resistance to the bubble message is highest at its end and was very high in 2006 during which I was occasionally hissed at by developers, builders and connected professionals at charity fund raising talks. That denial, characteristic of bubble psychology, lasted into 2009 with official denials by the Irish Government and Financial Regulator IFSRA. The bail out followed.
Throughout rest of the 2006 satirical TV series I did many items to reinforce the point eg cannibalising mortgages, skits on 100 yr loans, mythical Island property off Greece, underground home car parks, flat pack saunas for the home boiler, helicopter flights to work, the list goes on.
The clip on Irish property has, for several years been taken out of context with the content, both of the TV series and other works and misread even though it clearly concludes that investing in Irish Residential Investment Property is ‘ NOT A GOOD IDEA’. It does so by proving why, ie rental yield compression from huge prices was going quite opposite the direction of rising borrowing costs, requiring a huge amount of equity to make it work and wasn’t credible. The average SSIA maturity was €25k.