Dublin house prices - wisdom of idiots

In the "Who said what, when" stakes, Davy Stockbrokers look like Solomon with this message from last year (no doubt, they hoped the investors would switch to the ISEQ where they were bound to lose!)



Dublin house prices heading for 100 times rent earned: Davy Stockbrokers: "White says that 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. In the long run, the value of any asset is dependent on the income it provides. In the property market, capital appreciation is theoretically a function of rental return. What is buying a house in any case? It is the opportunity cost of not renting. An owner-occupier/investor is buying a discounted stream of rents for as long as he/she wishes to hold on to the asset. And vice-versa: a renter pays a monthly sum to a landlord rather than interest to a bank. The opportunity cost of not owning a home is forsaking the potential for a return on that investment. But if rents are relatively static, not only is the potential for capital appreciation reduced, it is also more attractive in cash-flow terms to pay rent rather than interest."