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Property bubble bursting only after 2019. Two reasons, says expert.

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Remember just days ago the brouhaha about property bubble about to burst? Here’s that article: Property bubble close to bursting due to 3 reasons. Government must be ready.  This ‘prediction’ was widely shared. Anyway, I shared my personal views too about property bubble bursting. There are usually three reasons. Please be reminded that I just a working professional like most Malaysians yeah, not some experts you hear everyday. Here’s the 3 reasons why property bubble may burst.   Even before the dust settles, here’s another prediction. This is as per an article in FreeMalaysiaToday (FMT): Property prices not coming down soon, says expert.   While the title appears to be mild but this is the first line within the article, “A property expert believes the property bubble is only likely to burst after 2019 when developers and banks are no longer able to sustain the oversupply and inflated prices of homes.” 

The expert, Ernest Cheong said that the impending sales and services tax (SST) was unlikely to affect prices, sales of property. He shared, “The SST is unlikely to affect property prices because manufacturers of construction materials and developers are likely to absorb the extra costs, given that property sales is slow. Developers thinking of taking advantage of the SST will only be hurting themselves, so I believe the impact will be negligible. Cheong also said that prices and transactions would continue to be sluggish because many people simply can’t afford to buy homes. He gave two reasons on when would the bubble burst would only be triggered. First one is when banks could no longer afford to sustain loans taken by developers and defaulters. Second is when developers could not afford to hold to existing prices and inventory. Once these two conditions are met, he said, “Then it is likely that there will be panic selling by developers and panic foreclosures by banks. This is out of the government’s control and they shouldn’t interfere, let market forces dictate prices.”

His views were not shared by Anthony Adam Cho who is from a Melaka-based developer He shared that with the country’s growth expected at around 5.3% this year and despite the initial market contraction and capital flight after the May 9 polls, the situation wasn’t as bad as it was made out to be. He said that the demand for homes would always be there with the country’s population growing 3 to 4% annually. In fact this was what he said, “Roughly, the country needs 25,000 new homes annually to meet the demand. All these years, we have only managed to produce about 60% every year, so we have pent-up demand.” His prediction is that there would be a temporary slow down in sales of houses for 2018 and 2019. This will improve when the economy grows. Plus the positive news from the new government’s commitment to reduce corruption and ensure a more friendly business environment. The full article in FMT here for reference. 

I have already stated my views earlier actually, so let’s just let everyone decide what they wanted to hear yeah. On one hand, another new prediction of a property bubble bursting but it’s after 2019 and not something happening soon. Happy believing and taking actions yeah. If one believes truthfully that property bubble is bursting soon, then one of the best ways to take advantage of it is to hold as much cash as possible and wait. We could sell what we have currently to raise the cash well in advance of the anticipation. Cheers.

written on 30 July 2018

Next suggested article: EARLIER – Crash, No, Crash, No. debate continues. Action is similar.

 

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