end_user

Hi Almighty, Wiseman,

I might have caused unintended confusion by using the word 'gap' in a sense that is normally not used in market analysis. That's why I put the word in quotes, as 'gaps'. In any case, sorry about the confusion.

However, what I meant was that we are unlikely to see a serious uptrend in prices when the market is consolidating after a previous such uptrend, spanning a few years (at least 3 on my count). If this is agreeable, then what can happen is that (in my view at least) the consolidation period could be extended over several years (say 2-3 years or more) or there could be a fall of significant proportions (say 50% of peak price) after which another bull run might start.

My question to experienced RE watchers is - is this borne out by RE data, in India. I know that this applies to stock markets, more or less.

BTW, is there anything like a Elliott Wave type theory for RE prices? Just curious...

Thanks.

end_user

balab1405

Is it worth to wait and watch ?. Or it has bottomed out and we can't expect any fall further ?. People who are in search or recently bought plz do give your comments, since I would like to know the real situation more ...

nabishek

Regarding current trend, We are in a very uncertain phase right now.

In most places the rates have risen back to peak levels of 2008-2009.

Since the fundamentals hasnt changed much, I personally feel we may not surpass the current levels.But the future is very hazy and one cant say for sure what surprise awaits us from which direction.

There are claims from builders of having sold out their projects even before launch.New projects within city are being launched with "already booked" status and new township projects is being sold as the new suburb 40km away from chennai.

The availability in ongoing projects seems to have suddenly dropped creating a supply crunch.I think its only the strategy of the builders to play on psyche of the buyers, but am not able to substantiate with facts.Who are the buyers?I dont know.

By taking the builders words, This strategy seems to be paying off better for them as it lures buyers sitting on the fence which didnt happen when they reduced the price by 10-15% earlier and buyers began waiting for further reduction.

Some facts you would want to consider before arriving at a decision

1.Interest rates have most likely bottomed out.We can see banks increasing minimum 100bps in coming month.

2.Construction cost likely to go up due to inflation and rise in cement/steel prices due to shortage in supply of raw materials from parts of India which is seeing local insurgency.

3.Sales tax being imposed resulting in more cost of ownership now for new projects.

4.Tax sops for Interest repayment most likely to stay as per new draft of direct tax code.

5.All Projects getting delayed and taking nearly 2 years to complete.

6.Rent to buy ratio still suggesting renting as a better option.

In my opinion, The RE market has not bottomed out yet and there is scope for another wave of correction within the year.But at the same time holding cash and waiting is not advisable and so is taking on huge debt as there is not going to be leverage advantage in short term.

Everyone should consider investing one major part in assets with inherent worth like RE/Bullion etc.But the decision should be taken individually considering one's personal and financial needs.

Requesting other members also to share their opinions on the current trend.

rameshyahoo

regarding inflation I can say that I wanted to build a kitchen in my apt and the daily rate charged by a set of carpenters is Rs 2000. Earlier it used to be half. cost of plywood is gone by 20% in the recent past.
Expect more inflation is what I think will happen all over India.

Economist

Yes, I belive high inflation will ensure property price will remain high and will not come down.

Inflation will justify furthur increases in property price.

Those who are not exposed to growth assets ( property & shares) will loose considerabily.

abk

I restate my redundant statement

first home buyers BUY.
rates have crossed peak rates in many areas.
India is different and there is no crash in the next 3 years.

well for investors i would say split your kitty in 40% RE,30% stocks,30% in
this is after adequate life cover.

balavis77

But the point to be noted especially for those buying vacant plots on the periphery of the city. These plots in 5 or 10 years down the line may NOT appreciate as much as say the increase that was seen between 2000 and 2010. As such comparison of buying a plot in Anna Nagar or Adyar 30 or 40 years ago and selling it now and buyting a plot in th city periphery will not hold much water.
Infact my hunch is most of the plots in the so called "Auto Belt" near Oragadam and Wallajabad will not fetch returns (in 5 to 10 years) as much as being touted now. The layouts may be sold out now (promoter point of view) but selling it to second buyers down the line (say 5 years from now) would not be an easy task at all (especially when one wants to get money at a short notice).

REUser

10 - 15% rates have been hiked in most of the projects.
My gut feeling, builders are as of now playing games .

India is no more different; it's highly connected to Global Economy.

Once the Base Rate and Interest rate hikes come into effect we may see the real state of RE, may be the bubble which escaped last time may burst this time.

Economist

As per REUser "India is highly connected to Global Economy"

I feel some of us believe that the property price in the whole world is crashed (after Nov 2008) except for India - therefore India must follow suite.

Looks like India is not alone in property price rise in the current environment.

Global house prices
Year to March 2010 (country, percentage change)


1. Hong Kong +27.1
2. Singapore +23.9
3. Taiwan +18.5
4. Australia +16.6
5. Israel +12
6. Finland +11
7. Sweden +9.6
8. China +8.2
9. Norway +7.6
10. Britain +5.4
16. New Zealand +1.5
27. United States -5.3

India not listed due to lack of proper data

Since March 2009 (15 months ago) in many countries Property prices have gone up considerably.

Just like India, GFC only registered only a small Blip in many other countries.

Guys only US and Some parts of Europe has considerable impact due to GFC but there are many other countries that cruised comfortably thru GFC
(India,China,Singapore and Australia to name a few)

In this "Global Village" still every country has there unique fundamentals. Yes every country will be affected when some major Crisis happens but the degree of affect will be considerably different. some countries are down for few years and some countries brush away the Crisis with few months of slower growth and move on.

kartkaus

ceedeeyes chennai pattinum are giving delivery of 1st phase flats in Jan 2011. It has been divided into 2 phases now [1st phase-1380 houses]. Manager says the demand slipped due to recession now only it is starting again but very slowly. around 921 houses booked.
thiruporur road looks neat now [first 2 kms road is ok but not proper]. guduvancherry road sucks as usual. went to site just last week during rains.
that supervisor ramachandran is a big time loser.....he pitches in for the actual supervisor selvaraj from time to time...this guy is harsh and mean, selvaraj is the same but he says things in gentle manner....
Staff Courtesy at their adayar office and that of the workers at site who take you to show your houses are great. As stated above that supervisors suck...
Local bus services are increasing...saw 4 buses when i went last week to the site...also in that thiruporur road electicity / lighting can be seen..so night time not much worry when coming this side.
pending taks include gas connection by bharat gas, seperate sub station for electricity by local officials, sewage plant- all these are external agncies so it is getting delayed.
a bit of road has been laid inside site. looks good...project coming up slowly but nicely....manager said they will pay 8% or so fine /month for delay .
in short .....but this as investment....trust me my father did that 20 yrs ago and now that flat isselling for 80 lacs now...however we dont have to wait that long for this to develop.....also another construction major is developing flats few km from ceedeeyes chennai pattinum towards guduvancherry side.....so that area is bound to develop.....
enjoy..