How do you make money when there’s a property bubble?

There’s a definite price bubble growing in the real estate arena in Klang valley to say the least. With the reports from various financial dailies showing strong or overwhelming growth in the nation as well as new and bold land acquisitions by several large developers, things are definitely gearing up for 2011. Without doubt, more prime located properties will be launched, and the prices are definitely on the upside.


As a matter of fact, just the other day, I was at an auction for a residential property auctioned for RM500K. To my surprise, it looked more like a night market than a high court auction. Never have I seen so many people so anxious to plough their money into properties before. There were more than 30 people in the courtroom! What baffled me was that most of the properties in fairly good locations were bid up and bought at above market value prices! The property auction I attended went for RM800K. For the life of me, I cannot understand the rational behind their actions.

I also experienced and heard of similar cases in the secondary market. Just the other day, I stumbled across a good deal in the market. It was a small residential property in USJ that was going for a reasonably good price. When I showed up for the viewing, there were more than 15 prospective buyers and real estate agents cramped up in the living room of the unit! From my observation, property prices in several hot spot areas such as Taman Tun Dr Ismail, Damansara, Bangsar, Subang, Petaling Jaya, USJ and Kota Kemuning, have increase by an average of 40% to 60% in the past seven months (since May 2010).

It’s true, the market is hot and it will only get hotter. Bank Negara’s implementation of the 70% capping on the loan-to-value (LTV) was in reaction to the tremendous increase in real estate transactions in the past six months. However, the question is, will it be enough to slow down the current market momentum?

The question one should ask is “What can a person do, in a situation like this?”

Better to Rent or Buy a Property Now?

With the ever escalating property prices in Malaysia nowadays, a lot of genuine property buyers (especially first time buyers) must be wondering: should i buy or rent a property in view of sky high property prices? You must have read or heard a zillion arguments on why you should buy a property NOW because there's an old saying that property prices will only stagnant and not go down even during economic downturn.

To be fair, I'll try to weigh the advantages of buying and renting a property and form a conclusion at the end of the article based on my own opinion. Take these opinions with a pinch of salt and draw your own conclusion on whether buying or renting a property is more apt for you.

Here's why you should buy a property now:

UPDATES: Procedure to stamp tenancy agreement

When a house is rented out, the house owner should draft two copies of tenancy agreement (one original copy and another duplicate copy) between himself and the tenant. If there's a group of people going to rent your house, you should elect one responsible person as the "leader". The house owner should attach a list of inventories in the house and the identification card of the "leader" together with the tenancy agreement to be stamped in Inland Revenue Department (Lembaga Hasil Dalam Negeri).