Q&A: Will the property boom be a continuous trend?

Read from the Star 2011, March 03

Dear Peter Yee,

1) What is your opinion on the ballooning prices of property over the last few years? Will this be a continuous trend or will the bubble ever burst in the near future?

2) I am currently looking for properties to invest in the KL / PJ region. My wife and I currently have one property which is our family home and would like to invest for our children's future due to the spiralling cost of education which is expected in the future. Would you suggest buying an existing property or a newly launched one for this investment and please also suggest areas which we could see some capital appreciation in future. Thanks for you time to answer these queries.

Kind regards,

Dear Dinesh,

Cyclically, Property boom and bust is certain, only the quantum and duration will differ. The momentum for the ballooning prices is still strong in the property market. This trend may carry over for the next several quarters. If there is any bubble, it will affect selected over priced and non income generating property first. Income generating property with high yield or more than twice the fixed deposit rate will be resistant from bubble as people still need a place to stay and conduct their business.

Generally, property investment not only provides rental yield but also potential capital gain if you know how to invest correctly. If you intent to invest for your children’s education, you may consider investing in ready build property as it will provide immediate rental income with more certainty. You may invest in an area near to your home or office as you have the local knowledge. Besides this it will provide ease of tenant management and maintenance. Also look at investing into yourself to advance your property investing knowledge and skills, such as reading property investment books and also the right property investment seminars before investing. This may help you prevent costly mistake in property investment and able to invest correctly each time and every time.

The one thing that people need to do is invest in areas that they are familiar with. Always start with an area closest to you, so that you know the area’s past, present and potential future developments, as well as target market, maturity and growth. You can start expanding on the area once you become a more confident investor.