tubaibabu

Mr. Ravi, i know the basic very well and my advice has a strong basis and the basis are.
1. The present price is absurd not in line with the purchasing power of the people.
2. There are huge amount of debt in the book of the builders. Rs. 90,000 crs from bank only as per RBI.
3. The debt restructuring is happened last year ( blessing from our great politician Community).
4. There are huge debt from PE investor(FDI money). How long they can sustain given the economic situation in their home country?
5. There are hadly any transuction from real user. In my sphear i have not come accross many people who has comitted to buy any RE in last two year. However there are lot many intended buyer and each earning a take home salary to the tune of 20 lacs and more.

Now may i ask you, what is your basis that the price will increase further.

jadhav_ravi

How do you come across people in your sphear It must hurt dude

Anyways, jokes apart, I did not draw any conclusion here. You are talking a lot of theory which may be different from the real picture.

You should mention your basis when you advise someone else. Otherwise you may be misguiding them.

VishalPrabhakar

I agree with Jadah Ravi, I do not see any depreciation of property prices in Mumbai..

it goes something like this:
an boom of 3* "X" percent followed by a drop of X percent...
and then a boom of I * "X" and then a drop of X...

But, the value of "I always remains > 2 to 2.5.

jadhav_ravi

Great observation Vishal.

As you said, the corrections are a mere gimmick. 100 Rs off for diwali :-).

If you just take into account inflation (Salary, Raw materials, CPI), there is no way that prices can go down. In America they go down because people put 10% of their money and 90% is mortgage and then they see foreclosures and depressed sales.

In India, thanks to NRIs and old philosophy, loans maybe make 50% of the transactions. Rest are outright purchases. Even people who take loans have 30% down payment. Indians are more prudent. They do not have a reckless lifestyle (although this is changing). In such a case there is no stimulus for deep correction.

India is a rich nation of poor people. The wealth distribution is very skewed. So though Indian GDP may be 1/100th of USA, many people (NRIS, professionals/businessman in cities) have similar income as in USA.If you look around you will find many bank/IT/telecom/retail guys who have incomes in excess of 10L. A married couple hardly finds it difficult to pay an EMI of 50K per month. That is about 50 Lakhs for the price of flat. So where do you see correction. Given the supply, there is ample demand (atleast in Mumbai)

What fascinates me is where do people get their money from. But it all seems to work. People are hard working and hell-bent to succeed and make money.
- Many people earn from stock markets. FIIs put money and support these incomes.
- Banks take 12% interest. Look at SBI/ICICI profits, they are huge. So they pay their employees good
- Insurance was inexistant till 5 years ago. Insurance companies are making big profits so they hand out huge money to their employees
- Airlines, they have good business. They pay excessive salaries.
- Businessman - Give the population of Mumbai even a good vada paav shop rakes in a turnover of 15-20K a day. So he has an income of 5K a day or 1.5L a month.
- Same with retail, telecom and ....
So who is poor: the rickshawman, the manual labourers, maids,... who live in slums.

It may all seem bad, dirty and miserable on CNN, BBC and Slumdog Millionaire but the ground reality is that many Mumbaikars do have the capacity to buy a flat of 1C while NRIs stare at the outskirts to get a roof and then sing about: NPAs/bad debt/GDP/GNI/debt-restructuring/per-capita/roads/slums and compare prices with manhattan.

mamba

Prices are unlikely to go down as

1. There is expectation among M'bai ppl that prices are going to go upwards all the time. This is the most important factor..If ppl are confident that prices wont go up much and may come down..many ppl would not be buying houses at all..

2. Price correction can only happen if there is distress ..(maybe due to stock market going below 2500 for a year or two/ some 2-300k jobs lost in M'bai...that kind of situation which has never happened since 1996). This can happen due to political instability also..but you still have to wait till 2014 for it.. Key factor driving the mania is FDI which has gone up from nearly 0 to 14K crore in last 5 year..Builder use this money..get 5 times loan(70k karod) from Bank..so effectively you have investment of 100k karod which is going to make house expensive.


3. Real estate bubble take a long time to puncture..min 10-20 yrs. In this case there would be not Govt action for this too as This is not translating in wage inflation /high goods prices in Mumbai since the wages are low due to slums..which reduces labor cost for Mumbai...

So, if one does not have money...just survive somehow..by paying rising rents every year(Next year rent would go up by 30 percent effectively) as HRA tax rebate is being removed but Govt is going to be subsidising home buyers by giving rebate .
Good option if you can get out of Mumbai is to move to cheaper cities or smaller towns where one can still live..

Even for rich person...mehengai daayan khaave jaat hain

jadhav_ravi

Living in Mumbai involves "survival of the fittest". The ones who cannot compete, move to Pune and Bangalore. It is cut-throat competition and it has always been so.

MANOJa

Very well said. Great input.

boldm28

CNBC-TV18 says this is the right time to buy a home

http://publication.samachar.com/pub_...26&nextIndex=1

CNBC-TV18 -- they are smoking something -- just have to figure out what

mamba

Whats written is that prices are going to be flat and huge supply...
dont know how the conclusion was reached..




"Residential rental prices in Bangalore are expected to stay flat, just like in Mumbai, Chennai and Hyderabad.

Industry experts say this is largely due to supply out-stripping demand in most of these markets.

Even this is not a great cause for concern. Experts say that while new projects may carry a higher price tag, an across-the-board increase in prices is expected only the second quarter of next year. Even then, prices that prevailed in the market in the pre-slowdown period of 2009 are not likely to be re-visited anytime soon."

jadhav_ravi

"Even then, prices that prevailed in the market in the pre-slowdown period of 2009 are not likely to be re-visited anytime soon."
If you follow the market then these levels have already been breached in Mumbai. Mumbai city, suburbs, extended suburbs (Thanke, Kalyan, Dombivali) and Navi Mumbai are all at theo all-time highs.
virar never quoted 4200, Kandivli never quoted 9K, Mulund never quoted 7K, Bandra never quoted 30K, Thane never quoted 5K, Kharghar never quoted 5K ever before 2010.
From what I know, atleast in Mumbai there is enough demand to swallow the spurt in supply.

This however cannot be said for Pune where there is more supply than demand. I have little knowledge of other regions.