I agree with Tukaram' comments. The reality prices are escalated due to the following:
1) The existing buyers (read investors) who want to have higher and higher realization of their investments
2) The Builders who want to maximize their margins (costs being nearly same v/s the growth in margins)
3) The agents who want to have higher commissions
4) MORE IMPORTANTLY - Ignorant prospective buyers - who cave in from baseless information provided by irresponsible people who do not verify someone comments before sharing it with all other people like Chinese Whispers.
Apart from that the Government' New Tax Policy - supposed to be implemented by 2011 - IF IT COMES TRUE - then would mean that the prices would come crashing down.
This again is due to the following (proposed measures by RBI):
- Tightening of lending to Builders
- Tightening of lending to Retail Investors (norms)
- Tax structures being different for NRI and RI....Please note that NRI community has a big role in the inflation of prices as well....with the proposed Tax Structure changes for NRI (and their property investments) as well as the Taxes proposed on 2nd property owned by an individual prices are 100% going to go down as demand will surely be hit....(i am calling this a 2nd round of recession which will come in 2011 IF THE POLICY comes into effect what it is proposing today!)
- Higher Interest Rates
- Lower Demand
If all of us are ready to wait till then (or at least a sizeable part of time till then) then we could see the lower demand affecting the smaller builders and their pockets who in turn will reduce the prices....
But the most important question is whether all of us would be able to hold on to our horses and create reverse pressure? We certainly have the power.....
Amit
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