Wednesday, June 22, 2005

Property bubble, go bust you will

Articles that catch my attention recently have been those of recession or any kind of bubble burst. During the Asian 1997-98 crisis, I was still in school and didn't really felt any impact on my life then. I learnt a tad bit about George Soros and used to write it in my BM essays discussing about spekulasi matawang and often scored some desirable marks. In hindsight, I would say the essays were conjured using memorised paragraphs laden with points I read from other sample essays. So, the marks were actually obtained with my capability of memorising an entire essay. Years went on after that and my mom only told me that my father is not bringing back home as much income as he used to. Such figures are unknown to me but I could still count the hampers that we receive just before every Chinese New Year diminishing in quantities.

I read that a glooming yet expanding property bubble in US and everywhere else in the world is gravely worrying. And everyone knows that, when US is not doing well, so would all other countries. Prices of property in Britain have already begun to slide and so has retail sales and consumer spending. Australia's property boom has subsided or more popularly termed as have entered soft landing. The figure given for 2005 registered growth at near 0% although economist gave a 7% drop in property prices. Economist predict for a bubble burst or a correction for the US's property market by 2006. What about Malaysia? I see property development launches everywhere mushrooming as if the economy is booming at a great extent. The price tags for these properties are not cheap either by any standards. Although I don't have the figures but it surely feels that price appreciation for the last few years has been growing so fast that it dwarfed the growth of the previous decade. So much so that I can only but conclude there is a definitely a possibility of over supply.

The very low interest rates have been encouraging this artificial growth. But I do not think the economy is growing as how the song is sung by the government. Recovery of PTPTN loans. Fines of RM 300 for motorist on the spot. The creeping inflation at 3.2%. Raising essential commodities like oil. Less returns on insurance endowment plans. Frigging low interest rates and EPF payouts. Pegging of Ringgit to remain until economy become robust. Bonds are giving a better return than equities investment. If these are signs of a bad economy, why in the hell are property prices booming?

I'm miffed because the appreciation is outgrowing my income. Hmph!