Yes property moves in cycle. As you pointed out, prices dropped time and again. This is healthy. But one thing for sure, you can't predict how long this bullish up cycle will last. It can end this year or continue over the next 20 years. Just manage your risk and you will be fine. I don't take big mortgage. Only 40% loan and 60% cash downpayment. Buy and hold, don't speculate to flip.
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Originally Posted by Unregistered
I would grudgingly agree if you could lock in interest rates for 30-yrs. But reality is, you cannot.
People that are buying today, are buying on the basis of sub 1 percent interest rates. What happens when the interest rates normalise to 4%? Or hit the 10% we saw in the 1980s?
People are buying today on the basis of positive carry - I pay $4000 in mortgage and I collect $5000 in rental, but forget that there's an historically high number of TOP coming onstream within the next 3 to 5 years, and rental may not hold while mortgage will almost definitely go up as interest rates normalise.
People are buying today, without fully understanding that property prices go in cycles. And that no matter how bullish the current cycle is, it is part of a cycle. In the US, there was never a national downturn, until the subprime crisis. In Spain, housing prices went up for 26 years straight, until 2007. Even in Singapore, we have seen multiple cycles, each round we saw an average decline of 30%+, with a decline of 50%+ from 1997 to 2002.
The only thing one can say is, this time is different. But is it really ?
Well, I say to each his own. But I will play the probabilities.
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