puser

There's also a possibility that prices actually don't come down but go up

MANOJa

The prices would definitely go up & we have to watch out for the best deals
available in the festive season.

mahesh pune

If you are considering loan case then do not mix it up with inflation. If house is taken on loan of 10% and it is appriciating at 10% then it is break even. Even bit profit as one is saving on rent. So break even will be at around 8 to 9 % appriciation per year.

pcpune

Well, you are considering "appreciation" two times here -

10% abd 8-9% -- which is what I have added -- and it is around 20%.

For me the maths is pretty simple - If i take a loan to buy something at 10%, and if the inflation is 8%, it needs to atleast appreciate by atleast 18%, for me to JUST BREAK even,

Most consumers DONT realize this,and they think well- if my 40 lacs flat has become 45 lacs in 3 years - its a cool 5 lacs profit .

For me - (If he is on loan), that 45 lacs need to be 65-70 lacs in 3 years -- JUst to break even --- now subtract the 4.5 lacs rent for 3 years - out of 65 -- still te value should be 60 lacs ---

Hence, a person is MAKING a good loss of 15 lacs in 3 years.

Hence, I always believe - buy property when

1. Either you have 50-70% cash, and the rest is loan,and in periods of high interest rates and highest inflation - most of the property is through cash- hence you get a good deal - nobody is buying in these periods

2. You dont have cash - about 10-20% - this is the time when you buy in periods of low inflation and lowest interest rates -(in 2005, home loan fixed was 7%, inflation around 5-6%), so that 10-12% appreciation over 1 year is manageable and possible.

NOW, we are in a period of HIGH inflation and HIGH interest rates - and the property rates are the highest - people who generally buy with cash are investors - absent from the market --- indicating it is really a WRONG time to BUY.

hitmady

Below is my experience:
* Ratio of monthly home-loan interest v/s rent. It's 10% v/s 4%. Owning #3 times expensive than renting.
* Buying RE on loan in current-market, one has to compromise on monthly-expenses & area of living.
* One can easily rent at developed locations like Aundh/Wanwori as compared to buying at Wakad/Undri.
* One can change rented-place on need but not owned-place.

Two examples:
*A colleague in my office at Magarpatta comes from Pimple-Saudagar (daily 2 hours of travelling) as she owns house there.
*A relative has bought house at Vishrantwadi with loan from ICICI at #11%. He left pune coz got better job in Ahmedabad.
Now he is earning 3% as rent in Pune and paying both EMI and rent

pcpune

Well, as I have said before, I dont think the property prices will go up or down by more than 20% in the next 3 to 5 years, market dynamcis simply wont allow it.

If it goes down - many people jump in - keeping the prices high.

If it goes up - the sales really dry up - forcing the builders to reduce prices.

Its the time of STAGNATION.

real_pro

Average appreciation of property is at least 20% if you buy from a good builder. History has proven it. You can look at the statistics of any good construction and will always remain. Maybe, it is not constant in some years but averages out over the years.

pcpune

Right, , so in 2000 - if the price of a Juhu apt was 1 crore - at 20% per year - is it 6 crores now, , I know it has doubled/tripled in some areas(see graph below) - but to grow at 20% each year -- the property needs to DOUBLE every 4 years ?

So, has a 40 lacs apt in Pune in 2007 become 80 lacs - no ways....

However, as you are saying there are periods - in which investors get lucky - 2003-2007 - where in you have had 20-30% per year appreciation -- however this would average out over the next 10 years -- to bring out the global average of 5-7% and ZERO percent (inflation adjusted).

The graphs for 2010 are availabe on NHB website I think.

mahesh pune

I am totally agreed on all these points. My debate is only on how to calculate profit or loss totally from financial points. Renting has many advantages. Only issue is uncertanity abt availability of same house. If u like too much furniture bit difficult to shift. Have to rent for life time. And not sure weather rent will remain same or may go up.

mahesh pune

If you are taking loan then it is not your money so inflation doesn't come in picture. You are taking loan of 40laks. paying interest at rate of 10% so in year 44,00,000. If propery get appriciate by 10% it's value is 44,00,000/- so it is break even. It is not your money so inflation doesn't come in picture.