When will property burst?

Dear Mr Tan,

My wife and I have been considering the purchase of a private property (for own stay) for some time now and hope to be able to get your advice.

We understand that the current property bubble is formed by a few reasons: -
1) low interest rate environment
2) QE policies in the western economies which have created massive liquidity in the market
3) low supply of public housing over the last few years resulting in massive pent up demand
4) booming economies with many cash rich individuals (China)

I read from your blog where you shared on your past  experience with bubbles. We are hoping to learn from your experience as it seems like this bubble is unlikely to bust in the next 2 years since the FEDS has agreed to keep interest rate low until 2015. 

Middle class folks like myself can only see our dream of upgrading floating further and further away. Look forward to your views.

REPLY

It may not bust within 2 years, but surely it will bust within 10 years? The question is - after bursting, will it recover? The prices are not sustainable, so the recovery will be difficult - look at Japan and USA.

Keep your commitment as small as is necessary. There will be a chance to buy it at a much cheaper price within 10 years.