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Do you believe the property bubble is bursting soon?

Posted in Personal Finance

When sentiment is not that negative and people say something negative, it will usually affect the sentiment further. The herd mentality always apply regardless of whether it’s an investment or just buying the latest smartphone model. Remember that prediction about property bubble bursting? Here’s that prediction: Property Bubble close to bursting  After that, in order to help people understand what would usually cause a property bubble to burst, I wrote this: Understanding 3 property bubble bursting signs and more  I still did not know what people think actually. So, I ran a simple poll. Just two questions. Results as below: Actually, there’s a quarter of people who thinks that the property bubble may be bursting within 12 months. Frankly, this is a pretty high number. Another 77 percent says that they are not sure yet. This does not tell us that they are confident, ok? So, what could be done in the mean time? I will run the same poll next month. 🙂

As for what could be done, I would advise those who believe a property bubble bursting to start keeping and accumulating cash. Turn everything into cash because you may soon have a window of opportunity to buy properties at below-market-value. It’s a window because as long as the economy is still moving, the property prices would slowly recover. Then, the below-market-value properties would be back at market value again. If this does not happen within 12 months, well, you can then decide what to do next. Just a reminder yeah, when the property market do crashes, the stock market usually crashes earlier. This is based on historical happenings yeah and not a prediction of future. One more reminder, oversupply is not a clear predictor of property bubble crash. Here’s one earlier article: Unsold units up by 40%. Should we be worried.  

For those who are not sure yet, just like me, we should continue to follow the news, especially about the economy. Fundamentally, it all goes back to the state of the economy. By the way, based on international convention, Malaysia does NOT have RM1 trillion debts okay. If we have RM1 trillion debts, our rating would have dropped. Here’s that latest news in asia.nikkei.com  Continue to view and evaluate homes and if we found one that we really like and it happened to be at a good price (10 percent below the surrounding market-value), we could still buy it. Just do not buy because we want to buy, that’s not a cool reason. Historically, property prices would have ups and downs but it generally inches upwards. This is because everyone’s salary is also going up over the years. In terms of value, it may be ‘eaten up’ by inflation but that’s the main reason for property in the first place; hedging against inflation! Happy understanding.

written on 3 Aug 2018

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