All the money coming out the FD's due to low interest rate all ended up speculating in the property market. If you notice that, most of the new properties are barely tenanted even after 6 months to 1 year. Finding tenant is so-so places are also difficult now as there is a massive oversupply of units to rent. But surprisingly no one wanted to sell, as many are holding on to their units even though they are not making money. The sudden surge in prices has caused the rental yield to dive down from 7%-8% to currently now at about 4+%.

Seeing good demand and sold out situation, the developers are all raising prices and getting super profit. I have seen one developer rising prices 3 times during a launch, almost once every couple of weeks. When I ask them why? They say very good demand, even raise price still got people to buy, so why not keep raising, so end of year bonus becomes very nice.

Also there are a lot of people that got burned in the stock market crisis of 2008, they don't dare to put money in stocks, FD is yielding too little with no inflation protection, naturally all of them will gravitate to properties and gold to 'protect' their assets. There is no other suitable investment for those who have less risk tolerance and also seek inflation protection.

But as every asset out there there, it can form a overbought position, I would not call it a bubble as the prices are not extremely ridiculous yet. In an overbought position, the prices will tend to consolidate for some time to release the pressure, properties will not fall, but will be stagnant for some time until the macroeconomics situation (salary) manage to catch up with them.

I have some properties as well, which have seen a huge surge of 70%-80% for the past 3 years, but I am not content, anyway I am observing the current prices and I feel, it is not worth to invest in properties at this period as the yield are way too low. And I seriously hope that BLR continue to rise to further consolidate this 'hot' market, so that us decent long term investors get better yields.

This post has been edited by gark: Jun 19 2010, 09:10 AM

Yeah, all kinds of agents keep on sms and call me if I wanted to sell my unit, say got ready investors to buy. I wonder where the heck they got my phone number...?

Not yet, there was a Rm 600 psf condo opening for sale soon in Damansara and looks like it's going to be fully snapped up, in fact you have to buy with balloting speaks of the demand. Too much hot money going around

This post has been edited by gark: Jun 19 2010, 03:57 PM