19 May, 2015

Never say Never again

Never say Never again... I'm not talking about the Bond movie by that name.

The message here is more direct. Lots of people had the conviction that Properties and Gold prices can never come down. Gold prices have come crashing down like a roller coaster - From $1800 to under $1200 an ounce. In India, the crash has been muted due to rupee depreciation, but still has given negative returns in the past 2 years.

There was wild buying in Gold and Silver in the go-go days of 2009-2011, where everyone was convinced that Gold prices would double, triple from the current levels.

Property was a similar story. We have seen many who have cashed out from every where else to get into property. Most of them have also takena huge loan for it. Again the conviction was that property can never come down. We are on the cusp of that myth being busted.

There is huge unsold stock across the country. Property prices have started correcting. Reports from across the country indicate the down trend. There are many cases where property has been booked and payments made upto a level... but nothing has come up. Money is stuck and uncertainty looms large.

The full correction will happen over the next 2-3 years, maybe. Brace yourself for the ride, if you are over leveraged on property.

Having a sufficiently diversified portfolio across different asset classes has huge merit. It is at times when one asset class massively underperforms does one realise the advantages of diversification.

Property prices or gold prices can come down. No asset class will ever be always on a upswing only. Never say Never again. 
Forwarding an article that appeared in Accomodation Times, about Kandivli ( a suburb of Mumbai )

No comments: