Quote:
Originally Posted by ahirman
A lot of people are trying to link falling realty prices across the world specially in US to India. Its really apples to Oranges.
Real estate prices never go down in India and never will. The reason is we dont look at realty as a financial instrument with all other available investment options. Also we are more emotional with it. Demands has been always high and supply low and seller knows that wait and watch pays.
Prices will stagnate at the most before climbing up steadily again but the kind of correction we see in US market is something which is never going to happen in India.
How much long will stagnate and with what rate they will climb back will depend on the location you are in and it differs widely. For Individual sellers its wait and watch time and for builders its time to throw in some freebies to attract crowd.
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I believe house prices will go down in INDIA, only thing is going to happen little late. Here is why there are few reason
1. In india house/land prices are too high relative to the income at prsent.
2. In last 5-6 years when actually house prices got doubled, who were the buyers? 1. people returned from abroad, 2. multinational companies looking to expand in India, 3. highly paid employees, 4. IT professionals 5. There were huge loans provided by Citi, HSBC and ICICI on based on the salaries.
3. Lot of investment in real estate due to high appreciation, investors will be pulling out their money as soon as they don't see appreciations, there is already prices started going down in Bangalore, Hyderabad, Mumbai and Pune, it will spread all over the India.
4. Recently there is interest rate hike and it will continue for a while due to inflation so there could defaults possibility due to increased monthly payment.
5. I believe there is stagnation in the hiring in India and lot of multinational companies are going back because the corruption in the system and there is no good response. Second is there is not really significant improvement in roads and traffic so I believe internation people don't like to really live in India. Unless they improve infrastructure and have good working system like good traffic, good policing and good Law, I don't think India can handle the growth, the buidling is going sink if the base pilars are not strongly build to handle high rise buidling and its true to any economy. Why would I pay like half a million dollar for the same home in India when I don't get salary, surrounding neighbourhood, good raods and good traffic like USA.
Now what is happening and going to happen in next few years
Due to global slowdown
1. India is loosing business specially in IT as well as other highly paid multinationals.
2. If highly paid employees who bought flats or houses based on loans and if they lose jobs, how they are going to pay? Recently PATNI announces 400 layoff due to non-performance reason. There are lot layoff happening in private sector in INDIA. It will have the ripple effect, it will happen slowly because media is not that fast like US.
3. There is not really the shortage of land in India, India is big enough to handle 1.3B population.
4. I believe india will get the same construction companies like US and then they will compete for the open market. I think thats when the house prices are really going to go down. Because they will provide good roads, good neighbourhood, good school, good greenary, 24/7 power supply and they will build big townships. I believe by that time India might have build big roads like US and that when the villages will be converted in new modern cities, where combination of business and residencies and with security that means no more unauthorised busniesses and people. If they build like millions of houses or flats, prices are going to go down and also the material they use will be quality.
5. I think this is completely bubble and I don't see the house prices going up from here in next 10 yrs in India. It may go down.