Somehow I am expecting the price of property is going to dip 10-20% in the coming year. Reasons?

1. Housing Bubble is starting to form in the asia pacific including Malaysia. World Bank has written a report warning the consequences including Malaysia.
China Premier is 'concerned' about the property bubble as well, so is the minister of finance of Japan. (Malaysia no news )

2. Since there is an asset bubble, inflation kicks in, recently we have seen oil is moving up to USD 80 per barrel, Palm Oil is hitting record 2,800 per ton and many others (guna naik 20 sen?)

3. Interest rates is one of the lowest in the world right now, including Malaysia. There is no way to go but up, and also due to the inflationary pressure. Bernake and China vice-Premier has signal that interest rate cannot be sustained at all time low. So interest rate hike is a big possibility in 2010. Already the credit spread in US is at 2.1/3 %, the largest spread since 2007.

4. Americans is already borrowing nearly 100% GDP, Japan is also borrowing 225% GDP, Malaysia is about 30% GDP, to be able to afford payments the USD and Japan Yen need to be lowered to be able to afford the interest payments. Therefore we are seign the weakening of the USD and money are going into Gold, temporary. If USD and Yen drops significantly, then malaysia economic growth will stall, and they will need to weaken the currency as well. All these points to inflationary pressure.

4. Comparing rental yields, currently now the calculated yields for property is extremely low (3%-4%), if interest rate rise, the yield will have to follow either rental have to rise or property drop. Either that all those who have heavy repayment might not be able to service their loans once interest rate hike and have to sell at discount.

5. Now the property market is like gold mine, with prices jumping 20%-30% per annum, which is not sustainable. How many employees in KL can afford half million houses and condo? How many condo's can you rent for 2k-3k per month, most probably only foreigners can afford to do so.

Well that is my view above, not necessary true.