The property market may be rigged by vested interests, but it is not immune to the law of bubble-bursts.

Bubbles at first are built with a genuine foundation that then expands to levels where the foundations turn shaky and then, on some trigger, the foundation collapses. The beginning of the 21st century saw many such bubbles being built and then bursting. The first of the bubbles was the rise in emerging market equities from China to Brazil, which saw equity indices in these countries rise manifold before collapsing in 2008.

The equity market collapse of 2008 that saw indices across the globe crashing by 50 percent or more was due to the bursting of the housing bubble in the US. That crisis saw holders of mortgage-backed securities going bankrupt and having to be bailed out by the US government.

The growth of emerging nations, especially the BRIC countries (Brazil, Russia, India and China), saw yet another bubble in commodities build with prices from oil to copper touching record highs. The commodity bubble crashed when growth in these nations came off sharply due to various excesses and commodity prices are trading anywhere between 30-60 percent off their highs.

Gold is the latest bubble to go phut, with prices falling by over 25 percent from peaks seen in 2011. Gold prices had more than doubled in the 2008 to 2011 period when there was talk of a collapse of the eurozone, hyperinflation due to central banks printing money and hedge fund managers, including George Soros and John Paulson, leveraging on rising gold prices. Soros bailed out when he saw that gold prices were unsustainable at higher levels while Paulson is continuing to bleed ($ 1 billion and still counting).

Gold prices fell, as markets did not see the euro collapse and inflation expectations trended down rather than up. In fact the TIPS (Treasury-Inflation Protected Securities) market in the US has been on a five-year selloff as inflation hedgers bailed out on the back of inflation expectations trending down rather than up.

In India, gold was seen as a salvation for all the ills faced by the public from high inflation to a weak rupee. Gold imports rose nine times since 2008 while trading in gold futures in the commodity exchanges rose to record volumes. Gold ETFs (Exchange Traded Funds) recorded strong inflows and assets grew by over 1,500 percent as the gold bubble grew. Gold finance companies such as Mannapuram and Muthoot Finance saw their market value grow manifold.

Gold is now hurting. Investors are losing money, speculators have taken big losses, ETFs are losing assets and gold finance companies have lost most of their market value. The gold bubble-burst is causing pain exactly as in many other asset classes.

It is the turn of the property market bubble in India to burst?

Gold prices have come down, so why not property prices. India's property market has defied logic. The country's economic growth has come off from 9 percent levels seen from mid-2000s to levels of 5 percent in 2012-13. Equity markets are down, bonds are weak, the rupee has tanked and property prices have gone up multi-fold. The reasons for property prices going up is less land in relation to size of population, no fear that prices will crash due to vested interests, black money going into property and many other such reasons that usually come up when there is a bubble being built.

Cold reality is hitting the property market now. Lenders are busy writing off loans or disposing attached property due to defaults. Transactions have dropped by over 50 percent in many parts of the country. Prices have come off in many speculative areas from Hyderabad residential to new airport land in Navi Mumbai. Property prices in places where there is no water, power and other basic infrastructure are the most vulnerable to a sharp fall.

Real estate firms have lost most of their market value while many companies have seen their debt being downgraded to junk. In fact one can safely say that the Indian property market has collapsed for many big real estate firms and now it is the turn of the smaller fry to face the heat. Unfortunately the tax-paying Indian who has put his or her life savings in property will also face the repercussions of the property bubble bursting.

Arjun Parthasarathy is the Editor of www.investorsareidiots.com, a web site for investors