SOS Property

How to spot a property bubble?

1. Current ratio of house price to average rent ratio


2. Long term rental yield


3. Cost of interest


4. Affordabilty ratio (3-5 times annual salary)


5. Stocks available, stocks turnover days
6. Loan affordability ratio

MyView

Property bubble can last longer than you can expect. Example, a Singaporean with a salary can buy a property in KL for only 1.5 times his annual salary, can keep the condo vacant until he is able to find a buyer or tenant in a year or two. The the price is artifically high as he has the holding power.

The price of the condo or property actually is based on sentiment of the crowd (local or not local). Hence, MARKETING plays a big role in sustaining the price. Another way of the sustainability of a housing property is the MANAGEMENT. If no one clear the rubbish, over a long run, do you think this will be a popular place to stay, or would a rationale person pays to stay there. Of course, the most fundamental reason for sustaining price is the LOCATION. Another factor for sustainable price is dependable on the long RENTAL YIELD. This will keep the investors keeps coming back.