Sansei

Hi friends,

The budget is over and RE has been ignored.

The flu has slowed, hope fully it will pass away.

The Govt has indicated that it wants to stamp out unnecessary

speculation that feeds into a bubble. thus the new Tax code has

proposed no benefits to home owners. In such a scenario, all the

investors will surely have to rethink their options. Had a first hand

experience with such an investor. Once it becomes more & more

public, these flats have to come in mkt.

What r ur views in this context? A genuine buyer will surely benefit.

So its back to waiting game.???

veeemkay

It is interesting. Definitely this will impact RE investors.

But I believe the genuine home buyers will benefit only when the proposed TAX code is implemented.

I personally as a buyer will play the waiting game.. and I think the investors will probably do the same for some time.. till it become more and more obvious that the new TAX code will be implemented.

VK

anup.thakare

Other than Swine Flu and Tax Code add to the discussion this year's Mansoon shortfall.

Drought is unavoidable and this is surely going to badly hit market and RE...I think.

aditi sharma

And Exports are down by 26% in July. Decline continues for 10th month in a row.

wiseman

- There will be another budget within 6 months.
- Swine Flu is expected to get worse, but with this level of mortality (especially given there are so many cases which are identified and treated successfully and there are so many more not identified but not becoming deadly), it will soon disappear as a market moving issue.
- Even if rails fail significantly (which is what it looks like) I believe this time around we will (with considerable pain) get over this issue and this news will quickly get accounted for by the markets since the boundaries are finite.

But its exports which could be such a kicker. For exports to get back to zero growth even, importing economies (US, etc) need to get to 2007 levels along with that level of credit. With the historic deflation in credit, there is literally trillions of $$$ less credit in the hands of the American consumer. So, do not expect exports to get back to zero, le alone growth for years to come. Since exports is nearly 15% of the economy, this impact is going to be more severe to the economy than the drought in the longer term.

cheers

realacres

Commutative exports from May-July are down by 32%. Swine flu is not slowing down, it is only that media is not reporting the news. Tamiflu has failed, the recent e.g. being that of Pune man of 25 yrs developing side effects of Tamiflu & condition is now critical.

The drought affected districts latest fig. is 248 districts, up from 167 districts in first week of Aug. Agri minister has said that Govt. now can't do much to control prices. Imports will not be able to take care of country's consumption. Most of development funds will now be pumped in for agri import, hampering development projects.

Power minister said that the power generation target of 2011 will be pushed to 2013.

About 500 banks are going to collapse this year. Domestic consumption will be hit due to recession & rural consumption due to poor rainfall. Exports getting hit means no respite from international markets. Exports won't pick up till world economy recovers which won't be before early 2011.

Auto industry has cut down its' sales figs. for 2009-10 & 2010-2011. If such is the scenario where people won't buy vehicles, how on earth would one buy RE especially when access to credit will be difficult along with soon to be hiked interest rates.

Hence, RE rates have to fall err crash to compensate all this & even if this happen, it may not paint rosy picture for RE as people are unsure about their jobs, increments etc. & are increasingly focusing more on savings rather spending while NRIs, investors are already an extinct species from RE scene.

Mak2009

I agree with you guys but then should we go for ready possession flats only? Beacuse there are high chances now that if we book a flat in upcoming (under construction) project and say more than 50% of flats are not booked or not sold then the project may get delayed till builder gets money and then we will get stucked for months or may be couple of years!
Am I correct?

Sansei

The tendency of bldrs to fleece the common people due to ignorance, lack of altenatives taking advantage of the unregulated nature of RE is causing more pain than any gain.

In the boom era these bldrs were increasing prices at the drop of a HAT, without any apparent increase in underlying materials & manpower cost. Now the experts/ bldrs/ investors justified the price hike citing mkt forces. i.e demand vs supply; The same does not hold good during recession The prices should have headed lower to clear the glut with reducing margins for bldrs.

The bldrs instead of clearing their unsold flats, constructing the already booked and paid flats; are merrily announcing new projects, slowing down constructions on older projects causing hardship all round. This is bad economics. On top of it they think of increasing prices at some sluggish sales thereby driving away the mass of buyers. This tendency has been flayed by none other than HDFC chairman and noted experts like JLLM.

realacres

Current breed of builders are worse than Mafia as Mafia atleast keeps commitments. Simply observe the pace of construction around you, & you will see the true picture.

And yes, go for ready possession apartments only, even if it means less choices, but it is far better than getting a good choice which may never materialize.

Sansei

The Govt has decided to stamp out excess speculation. Thus, the NEW TAX CODE.

Now the HNI, salaried and enterpenuers were coaxed rather helped towards the RE. Investors piled up flats on flats driving the prices in the bargain. Instead of providing affordable and quality houses, it has done the opposite later. Thus, u find Mumbai people / IT guys with large no of flats. Even if u visit any colony, one can see whole lot of the empty/rented flats. This tendency is going to change. Once these people c the abysmally low returns coupled with no tax benefits, they will dump these flats in mkt.

Govt intentions were correct, but with out any regulatory environment and absolute lack of accountability, it has created this problem. One would have expected A maruti / nano effect in house, but it has turned the opposite.