Quote:
Originally Posted by Economist
The global recession has bottomed,Most developed nations are now out of the woods.The recovery mode has began.
This Global Financial crisis,(GFC) has turned out to be not as bad as predicted earlier. Fortunately some developed nations did not even have negative growth. Mostly Europe and N.America was affected.
Equity market is seeing foreign investor returning to ride the upside.
M&A acitivities are picking up,IPO's are on the cards again.
NOW IS THE TIME TO BUY PROPERTY AT THE LOWER PRICE AND WATCH IT GROW OVER THE NEXT FIVE YEARS.
The return will not be astronomical as it was in 2005 to 08,however the forecast is healthy double digit growth for the next few years.
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Economist,
I will not pick an argument about the many "feel-good" statements made by you to arrive at your bullish outlook. But there are a few problems I see ...
Can you tell me anytime in the past when we had a "gentle" bull market?
We did have a flat period of consolidation between 1992 (post Harshad) and 2000 (post-Ketan :p and more popularly post-dot-com). But mildly bullish? Please let me know. Since markets are moved by human sentiment, which tend to the extreme 30% of the time and remain in equilibrium the rest of the time.
There is just one more point. On balance there are as many selling days for FIIs as there are buying days. So, where did you get this data about FIIs returning to the market in any significant way!
Like Abishek says, bullishness in RE will come when people "feel" richer on a sustained basis. During the last few years, banks helped them feel richer. Now, this tap is firmly shut. In general salaries are at best flat and in many cases down and this situation is likely to remain so for some time to come. This is because the world is experiencing probably the sharpest contraction in "
credit" in modern history and, coupled with serious over-capacity in almost every imaginable manmade thing, we will see a considerable period of deflation (as contra says). The Western world is likely to see a decade-long deflationary depression and we should probably see a severe deflationary recession for quite a long period of time.
So, exactly where do you see this buying coming in which will not only eliminate the
HUGE backlog of inventory (Delhi is reported to have 15 Crore SFt and Bombay, 10 Cr SFt besides all the other cities), but will take up all the new building required to get back prices up even in a "
gentle" way.
Any guesses where all this money is going to come from?! And how it is going to reach our pockets so we can go out and spend again without concern about the future and get ourselves back into this same mess again?
MY POINT OF VIEW
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I believe that we are again on the verge of another massive decline (you might even call it
crash). This time, it will be harder on general sentiment because people have come in at the top of this rally to put in their last reserves into the market, believing the spin-doctors in the Govt and hoping to recover their losses.
When they see even this money go down the drain there will be a much more serious crisis of confidence and a more telling impact on sentiment. This time around, many more fence-sitters (especially builders out on the edge of a limb) will come in with distress prices as well as banks trying to get whaever they can out of REOs - bank owned foreclosed properties.
You are right. Prices are lower. But they need to go much lower to make it meaningful again for people to buy and hope for a gain due to genuine buying. Right now, prices are at a level where th growth will only come from the "greater fool".
Let us see what happens. And we won't have to wait long since this decline should come in in the second half of this year itself, maybe even within the next 3 months. Patience!
cheers