26-07-09
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#1
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New Member
Join Date: Jul 2009
Posts: 1
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Do you think Calcutta real estate is overpriced?
Do you think Calcutta real estate is overpriced? What I can find out, a medium (1200-1300 Sq Ft) size apartment in new town, Rajarhat costs around 45 lakhs. South Calcutta similar apartment will cost from 1 CR. I assume average salary of someone working will be around 5 to 8 lakhs(working for say 5 years after completing education) in IT/(please correct me if I am wrong). So, he/she will have to 6 to 10 times of yearly income. In US, I think the bench mark standard is 4 to 5 times(i.e say some makes 100K, he will be able to comfortable afford between 400K to 500K) of yearly income. Also note, US mortgage rate is much lower than India average around 4.5%. So, why the market did not correct the price automatically? I think it is because of NRI and Businessmen ( using the housing market as a vehicle to convert balk money into white money). Since the supply of Apartments was lower than demand from these 2 categories the prices are holding up. But, with so many up coming real estate activities, once supply surplus the demand basic economic inevitability should cause the price to go down. Also, note, after the longest Global recession in recent decades compensation structure is going downwards. In USA high paying high bonus jobs are gone, at least in industry (in which most of the people from India), I am hearing in India also companies are reducing pay. So, most people will not have lot of extra money to park in Real Estate market. All these factors take time to get reflected in the Real Estate market, but will they be ignored by Indian real estate market and Price increase will continue?
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