Cities with potential property bubble bursting?

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Someone searched in google.com for this term yesterday “not a safe investment Malaysia 2018” and was referred to kopiandproperty.com  Perhaps this person wanted to know if the property bubble is indeed bursting in 2018 as predicted by some property experts? Too bad, I am just a normal working Malaysians like majority so I can only read and share what I learnt from many different sources. Oh yeah, should you want to know the signs of property bubble, here’s a few very important ones.  Coming back to potential property bubble bursting, I asked my best friend Google and he pointed me to this article with some predictions based on some numbers over the past few years. Red coloured boxes are those with high potential for bubble bursting property market. Yellow means they are overvalued. Green means okay while investors in the U.S must quickly buy in Chicago as it’s listed as undervalued.

Source: http://www.visualcapitalist.com/real-estate-bubbles-8-global-cities-risk/

Malaysia is not listed. So, where are we? We are definitely still a small property market as at today. 🙂  Just in case someone wants to say, ‘that’s because no one wants to buy Kuala Lumpur properties,’ then let me just point out that Melbourne, Perth or Brisbane is also not listed. 🙂  Manchester, Shanghai, Beijing and many more too. Sometimes, let’s not think too much yeah. Coming back to the article in visualcapitalist.com The question posed by the writer is very relevant. “But what happens when too many people pile into a “safe” asset?” The writer quoted UBS’s report that certain cities have seen prices rise at rates that are potentially not sustainable – and eight of these financial centers are at risk of having real estate bubbles that could eventually deflate. UBS says that annual increases at a 10% clip would lead to the doubling of prices every seven years and this is not unsustainable. Please do read the full report here with many other links yeah. 

Three things we may want to take note when it comes to property investment. Number 1. Just because the name is a much more famous one does not mean there’s no bubble. There will always be a limit to how high it could go before people realise there are cheaper potential investments elsewhere. Number 2. Do not think of the Malaysian property market as a major one because we are still far away from the radar of most of the international property investors. This is definitely a good thing. Number 3. If we think of Singapore as that benchmark for Kuala Lumpur or Iskandar or Penang or Kota Kinabalu since it’s nearest to us, then is is worth nothing that Singapore is still growing today. By the way, I would think both Bangkok and Jakarta to be a much more significant property market than Singapore in the future. Within Bangkok itself, there’s 8.3 million population while in Jakarta, there’s 9.7 million. Happy that Kuala Lumpur is not listed? Why not. Happy following.

written on 22 Feb 2018

Next suggested article: Global property bubble about to pop? Pop means kaboom!


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