Originally Posted by mamba

Even now,builder sells stilts as garage . Also they take black money esp Lodha ..4L in cash. So it would never be implemented properly ..Lot of lays..but you know how tough for muslims to get flats ..

Originally Posted by jadhav_ravi

Why do you think it is unaffordable?

10 years ago everyone thought South Mumbai was unaffordable. It was unaffordable for middle class. But it sustained and is still at all time highs.

10 years later, south Mumbai has engulfed suburbs till Dahisar and Mulund. Like South Mumbai 10 years ago, this area is now unaffordable, only few privileged are buying here and it is sustaining.

Current middle class buys in remote suburbs (virar, kharghar, panvel, dombivali, kalyan). So these are the new suburbs. 30L is sustainable for a home loan seeker. 30K as EMI sounds affordable to many of the middle class of today, as I see these guys shopping jackets for 2K, cell s for 15K, cameras for 10K, cars for 5L, .... If School fees are Rs 5K per child, don't you expect to pay 30K for home loan?

When you compare prices to New York or London, you also have to take into account the size of the city.
Mumbai has a population of 2 crores. There are lakhs of NRIs from Mumbai. With OCI and PIO categories, India has opened flood gates to allow millions of foreigners to buy into Mumbai Real Estate. Mumbai has shortage of land.

In such a case, the whole of Mumbai has turned into what is Central New York or Central London. Rates in Central New York and Central London are in excess of 4C, so is the case for Mumbai.

The next argument you will raise will be, how is Mumbai comparable to New York, Shanghai, Tokyo, Hong Kong, Singapore or London.

Well it is not comparable in terms of infrastructure but given the globalization and the income disparity in India, it is not difficult to have lakhs of families having comparable income to people in these developed cities.

Look at many Indian universities in cities, half of the crowd goes to US for MS. All these guys want a flat in India, because none want to settle in US.

Look at the stock exchange. If it has risen 500% in last 10 years, where will the money go? Does a stock market investor, live under share certificates: No, he wants the best place to live.

Diamond bourse, Insurance, Banking, airlines, IT, bollywood, small industry, TV industry, ... the list is endless. If you go out to look for crorepatis in Mumbai, you will be shocked. I find it difficult to save 10K a month but trust me on this forum I have met 10s of people with budgets of 1-2C. Some are NRIs (Dubai, UK, US, Bahrain, Saudi, even Australia). One NRI guy was in his late 50s, he says he is putting all his savings to buy a flat, and he had 5C which he wanted to spend. Then there are high-end Indian: one doctor with good practice, one theatre professional and one guy (I donno his buisness) but he bought 3 flat in suburbs. Lastly there are many onsite IT guys, who have been onsite for 5 years, have saved 20-30L and want to buy a flat. They get annoyed when I tell them that after 5 years of hell-like-life and prudent savings they can only afford Virar.

Everyone wants the best of the housing, and as housing market has the personal touch, the builder charges what you can pay. If the other guy wants the flat and can pay 5C, then 5C is the price. The housing price is very corelated to income. It is not a commodity. The price is always a premius, else everyone will have a flat with ease.

So if middle class can take 30L loans, the remote suburbs will have flats at 30L.

If upper middle class can pay 1C, and there are 30K flats in suburbs, the suburbs will have 1C as price.

If there are 10K flats in south mubai, then they will be price upwards of 4C as there are bound to be 10K people in a poulation of 2C who want to buy a flat and can pay 4C.

Even if I am wrong with the calculations, I am definitely not grossly wrong. So even if there is correction, do not expect it to be more than 10-15% as there are too many people waiting to jump in and push the prices back up.

Originally Posted by Sharpj

Of course it is not affordable.. South Mumbai was not affordable then and not now.. Andheri to Borivali was possible, but that is also getting out of reach.. I think even New Mumbai is terribly over priced..

What I am saying is.. this is actually a bubble.. builder borrows and buys land at exorbitant price and sells over priced houses that are bought by people by again taking a loan.. If any one defaults banks run the risk because they own a collateral and that is something which is probably more than its value..

I am not saying there will be a crash.. neither am I saying it is imminent in the near future, but I seriously have doubts on the pricing.. we will price ourselves out.. probably already have..

Look at Dubai man.. Can you ever believe that RE can crash there with all the arabs having so much money.. but it did dip din't it..

Originally Posted by jadhav_ravi

Dubai crashed because there was no demand. Arabs are handfuls, rest are expatriates who do not have long term plan. In Mumbai, people have janam-janmantar plans.

After few years you will see no projects being launched in whole of South Mumbai & Suburbs, so prices will stay as they are. Only new projects will be in remote suburbs. Ask anybody in Mumbai and nobody wants to sell. They live on income Rs 3000 per month but want to live in South Mumbai in their 2C flats. If they sell then they can get 30K per month for the rest of their life.

So all new developments will be in remote suburbs. As remote suburbs are priced similar to Pune/Bangalore/NCR I do not think that the price is not competitive. 30L is reasonable give today's salaries. What people need to do is change their perspective. They have to accept the fact that homes are generally bought on a 20 year home loan. In Honk Kong people inherit home loans (50 years). If people accept the fact that they have to take home loans of 20 years (as in US, UK, Japan, Hong Kong, Australia) then the prices will all sound afforable to you.

Look at the prices from EMI perspective. EMIs of 30-50K I think are afoordable to many of the IT, Finance, Airlines, Entertainment, Telecom, Retail professional couples.

Originally Posted by Sharpj

People are not selling because of greed brother..
I was looking for a 1 BHK in chembur.. Budget was 25 to 30 L.. yes nothing was available... I was shown a poorly maintained apartment in a 15 year old building and the price was 54 lakhs (negotiable) which was way beyond my budget and though I had no intention to buy that.. Within a week however the seller raised price to some 70 lakhs because in the street a building had gone for re development and the broker was selling me saying it is still a great deal and if it goes for redevelopment I will get a 2 BHK and in the current rate of 12 to 13 K psf.. it would be 1.2 crores.. this is a bubble .. nothing changed here but price just went up in 2 weeks..
Distant suburbs is fine if my work is in distant suburbs.. whats the point to life if I travel and work for 12 - 14 hours a day.. no NRI would do that..

If it is always going to be so high.. Mumbai will never get out of the slums.. middle class is not just IT, Bankers, and media.. there are plenty more.. the vast numbers that hang out of the second class local trains..

Originally Posted by Sharpj

Ha Ha It is priced in too early.. but there is no refund if it does not become the next Tokyo...

Even if it does.. I do not think it is during my lifetime..

Originally Posted by geeee

Prices don't have to either keep going up or come down if they are too high. Mumbai real estate defies simple economics. Personally I believe Real Estate not just in Mumbai but, in India generally is overpriced. There is a bubble but, it may never burst. The builders have enough financial and poliotical muscle to hold onto to current prices unless something really goes wrong with the world economy. In my opinion prices over the next 5 years would probably stay where they are or maybe within 25% of current prices which if you adjust for inflation or the opportunity cost of the funds is the same price or maybe lower. Ofcourse, if the builders get too greedy and prices keep going up the way they have been, I don't think 20-25% annual increases in prices can be sustained for too long.