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Predictions on property bubble burst date

It may happen within the next few months or it may happen in a few years.  If it does not happen within 2 years,  it will happen within five years.  If it does not happen within five years it will happen someday.  Familiar? Property investment experts / analysts, property related NGOs, your cash rich friends and more. Everyone has said something about what they think of the property bubble. Some way too optimistic which you should not believe. Yet, some are way too pessimistic that if you believe then it should be the next economic crisis.
Everyone has their own version and reasons why. Many followed blindly and either become very rich or bought at the wrong time. Worst, some used up all their wealth because their friends say go and buy. ‘I have earned 100,000 profit just by flipping. Follow me sure no wrong!’ Dear all, investing in property should be done when you understand what you are investing. Read books, pay for some seminars, listen to talks but you must do your homework. Even when you invest in unit trusts, there are great years and there are ‘below FD rate ‘ years. If you do not know for sure why you buy, you better not buy.
When property prices go up too fast, it means the demand becomes an artificial one. As soon as sentiment turns negative, the prices are not sustainable because majority of the purchasers are not for own stay but for flipping / speculating. This was what happened in US a few years back and there are signs of it happening here in Malaysia too, especially for higher priced properties. No matter how much you have earned in the market, it is important never to over leverage. If EVERY SINGLE friend in your circle is telling you about buying properties, just like when uncles and aunties talking about stocks in the market, it may be time to pull out. As for demand, it continues to be strong. At the right price, it will be snapped up almost immediately.
Written on 18 Dec 2013
Next suggested article:  Property prices and developer’s profit margin

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of kopiandproperty.com He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. kopiandproperty.com is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.

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0 Responses

  1. “If it does not happen within 2 years, it will happen within five years. If it does not happen within five years it will happen someday”… No need any expert, everyone can say it.. hahaha

    1. Stephen, you are a real property guru, kindly don’t simply predict. At least give some supporting facts. 🙂 For example, ‘based on my calculation, property bubble will burst within a period of 1 day to 10 years’. This is a conservative prediction because maybe it may not happen within 10 years or even happen within the next week.

  2. Agreed on whatever you invest should not be over leverage. I think my interpretation would be you need enough cash to embrace the storm for at least 2-3 years should there be one. If you are uncomfortable should reduce the size of your property investment. No one know when the storm is coming. The global economy outlook is more uncertainties than before, meaning not the best time to bet now.

    1. Kim, agree. Global economy is uncertain n it will be ever more uncertain. Just have to buy objectively. Manage potential risks. No risk is not possible too.

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