Waiting for property bubble to burst?

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Property bubble is always an interesting topic. Since the market is already so bad where transactions are concerned, why not wait for the property bubble to burst before entering? Once it bursts, surely prices would come ‘jumping’ down. I have a friend who sold his very expensive condo in Bangsar South 2 years ago because he was very confident he could scoop up many properties when Malaysia’s property bubble bursts. It was so negative he said, referring to all the Facebook comments. Well, in 2014 and 2015, Malaysia’s GDP grew by 6 percent and 5 percent respectively. Just 2 months ago, he used a huge chunk of the saved money to buy a landed home in Sungai Besi instead. I personally do not believe in waiting for the property bubble burst before buying. Let me share why.

No one knows exactly, when. Have you tried asking your friends, perhaps friends who are bankers or economists? Here were three earlier predictions.  Next crisis is looming – PM of 6th largest economy in the world  OR  9 months, financial crisis may happen – Arturo Bris of IMD  OR  65% probability – recession by end 2015  Alternatively try reading all the continuous and ever changing predictions. Is there really a date that we are so certain it would happen? Latest prediction here: Getting ready for the next global recession?

Who should you believe? Have you decided who should you believe? An economist who managed to predict the previous recession / crisis? The CEO of one of the largest hedge fund in the world? The President of America? Your friend who’s extremely good in persuasion? Perhaps charles, the editor of kopiandproperty.com? Haha. To be direct, I have yet to know of anyone in the world whom I can trust totally.

Are we brave enough to take necessary actions? Assuming we believe the crisis should be unfolding soon, say within the next 12 months. Should we not be selling every property we have today, while the price is high? Once we have sold them, keep the money in the bank and wait. Once everything drops, we can then buy them back happily and laughing all the way to the bank. Unfortunately, things do not really work this way because the market is weak and prices are softening and selling now may meant you lost some ‘profits’ should you have sold it last year.

My belief is that in every market, there are opportunities. Today, home owners are more willing to consider some price reductions. There are secondary areas which many chose to ignore, despite MRT stations coming up near them. There are also secondary properties which price per sf is still below RM400 and yet everyone only wants to buy new ones for RM550 per sq ft or higher. Of course, the same applies for waiting for the highest price to sell. Truth is, we should sell if it has met what we set out earlier or if we could use the proceeds to buy another targeted property. I heard some famous property guru once said, ‘don’t wait to buy but buy to wait.’ I think it’s going to be true for a very long time, unless we bought a totally useless property. Happy wishing, waiting, buying and selling.

written on 8 Mar 2016

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