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IREF® - Indian Real Estate Forum > Real Estate in India > Real Estate Pune > Indian Real Estate Bubble Will Burst !!!!
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Old May 13 2012, 11:25 PM   #1
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Default Indian Real Estate Bubble Will Burst !!!!

Guys,

Long time on the forum... I still find people trying reasons to purchase, not to purchase and to rent. If you had a long term plan, one wouldn't have got into an argument, and just preferred renting.
I tried "very hard" to purchase a apartment this season in Pune - and believe me ..its not hard if you are an eternal optimist, and have 1-2 crores of black money lying idle...
However, for an average citizen like me, the registration cost itself was 2 times the annual rent...the service tax etc...i could just rent for five years with this money..with interests and savings from bank..so now I just don't need to own a property anymore...I can live it off free...

I would again advise people - please invest your savings into PPF+MFs/Shares+ Term Insurance + Med Insurance + Rent..and enjoying the next 2-3 years without even looking to even find a property.

Let 2014 unfold, and let the GDP cycle play its game...its already down from 9% to about 6%, once it falls below 5% ...hell will break loose.

Already, my IT company and other IT company's are feeling the "inflection" point...customers asking lower rates - employees asking higher salaries (for inflation), and the cycle is breaking down for real.. in India...

By the way, I am only paying about 10% more rent than I paid in 2007-2009, has the RE prices doubled ??? ...maybe on paper.."consumer data on rent" shows otherwise//// RE stocks are hitting 52 lows - they would still go down by another 50% from here.....

PS: This note is not for - all eternal optimists and to people who have stashed up money !

 
Old May 14 2012, 12:00 AM   #2
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You are more or less right in your analysis. The ones being are either loaded with black money or misled by the hype.
 
Old May 14 2012, 12:01 AM   #3
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what exactly will happen when it goes to 5%?
 
Old May 14 2012, 12:35 AM   #4
 
 
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pcpune,

+1 to what you have said & my faith in bubble just got re-enforced when Samrajya started selling few flats for 8k/sq ft off Paud road !!

I strongly feel that this time the fall will be such that even next generation will remember such RE stories.

Still when sales are not happening & prices still being artificially hiked by builders, I really doubt how long will this last. Infact, err had to delete this sentence, else builders would have taken a clue.
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Old May 14 2012, 06:47 AM   #5
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pcpune,

+1 to what you have said & my faith in bubble just got re-enforced when Samrajya started selling few flats for 8k/sq ft off Paud road !!

I strongly feel that this time the fall will be such that even next generation will remember such RE stories.

Still when sales are not happening & prices still being artificially hiked by builders, I really doubt how long will this last. Infact, err had to delete this sentence, else builders would have taken a clue.
not sure if the pessimism is real or just an attempt to downsell the real estate market....

... ok let us all assume there is a slowdown in growth... what will happen.... the unsold inventory will put downward pressure on prices if builders feel the need to cash out.. Will there be real buyers in such a market... i doubt.. real buyers will be scared even more to take on debt when salaries are trimmed and uncertain.... Most likely buyers will be those who have high equity.... indian market will see another wave of businessmen buying in bulk.. salaried living in rented accommodation... black money will again come to rescue... by nature businessmen love such a scenario.... panic ridden scenario.. where blackmoney gets a safehaven in the form of real estate.. builder wont mind it either.. ...

chances of all this happening... some of us think are high... some of us think low...
by nature.. we are attuned to react more to bad news,,... meaning... rs 1 lakh or 1 crore loss means time to mourn... cry and shout.... let all know.. that lost so much..... but rs 1 lakh or 1 crore gain is no news at all... all happiness is within... nothing is shared....

so bad news is just over exaggeration of the troubles in the economy... i agree there are issues... like unsold inventory and stagnation in salaries... but... NRI flows are increasing into the real estate.. these flows do not count in FDI or FII... but rupee depreciation has made indian real estate an attractive asset to consider for investment......
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Old May 14 2012, 07:08 AM   #6
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such times are a nature's way of balancing.. earlier.. businessmen used to drive real estate market.. in the last seven years.. or so.. it is the salaried class that is driving the market...

now i guess another wave of businessmen will come... to buy the real estate..

but those who think(// that is salaried class)... they should not buy.. if salaries get trimmed... so the capacity to borrow will go dwn as well... which will mean... lesser buying power.. which will mean... salaried class without home.. will wait for another boom and by that time... real estate may go out of their reach even more... so waiting may not help such a salaried class without home...

but new generation in those timees will drive the market with their salaries..

but for now... so if one who is 30 yrs or so.. take the plunge.. and cash on ur high income and buy a home where u want to stay... spend wisely.. and wait for good time to come... ur children will be proud of u... it is this time that the prices are in ur range... once left out.. means left out forevver.. you 30 yrs olds... something u need to remember.. u r not getting younger... so.. capacity to borrow will go down.. as salaries stagnate.. repayment periiod reduces.. so buy wisely... for ur family...
 
Old May 14 2012, 07:50 AM   #7
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i am hearing/reading similar views since 2009 or even before that. i dont know if this will happen or not, eventually bubble will burst but not sure about 2014. there is more likelihood that it wont happen. people siting on the top - rbi, finance minister, other political parties etc will do some jugaad and keep rates high. u may get 10 lakh 1 bhk but in an area which holds no promise of growth
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Old May 14 2012, 07:56 AM   #8
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Real estate for investment is a bad idea under the circumstances but end users cannot afford to wait for prices to come down (or bubble to burst, so to speak). If your budget is permitting, take a plunge otherwise stay away. There has been a year long thread on gurgaon board forcasting "bubble" just round the corner, prices have moved up all the while.

For more please check this:
http://www.indianrealestateforum.com...ain-16152.html

I am not for these sky-high prices either but as prospective buyers the sooner we accept this reality the better it is. I am not going to say that the prices "will never" come down either and give endless justifications to support my case. If prices do come down 10-20 % , so be it, as long as I have a place to call home, it matters less if I am living in 1 crore home or a 50L home.

Quote:
Originally Posted by pcpune View Post
Guys,

Long time on the forum... I still find people trying reasons to purchase, not to purchase and to rent. If you had a long term plan, one wouldn't have got into an argument, and just preferred renting.
I tried "very hard" to purchase a apartment this season in Pune - and believe me ..its not hard if you are an eternal optimist, and have 1-2 crores of black money lying idle...
However, for an average citizen like me, the registration cost itself was 2 times the annual rent...the service tax etc...i could just rent for five years with this money..with interests and savings from bank..so now I just don't need to own a property anymore...I can live it off free...

I would again advise people - please invest your savings into PPF+MFs/Shares+ Term Insurance + Med Insurance + Rent..and enjoying the next 2-3 years without even looking to even find a property.

Let 2014 unfold, and let the GDP cycle play its game...its already down from 9% to about 6%, once it falls below 5% ...hell will break loose.

Already, my IT company and other IT company's are feeling the "inflection" point...customers asking lower rates - employees asking higher salaries (for inflation), and the cycle is breaking down for real.. in India...

By the way, I am only paying about 10% more rent than I paid in 2007-2009, has the RE prices doubled ??? ...maybe on paper.."consumer data on rent" shows otherwise//// RE stocks are hitting 52 lows - they would still go down by another 50% from here.....

PS: This note is not for - all eternal optimists and to people who have stashed up money !
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Old May 14 2012, 10:53 AM   #9
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Originally Posted by pcpune View Post
Guys,

By the way, I am only paying about 10% more rent than I paid in 2007-2009, has the RE prices doubled ??? ...maybe on paper.."consumer data on rent" shows otherwise//// RE stocks are hitting 52 lows - they would still go down by another 50% from here.....

PS: This note is not for - all eternal optimists and to people who have stashed up money !
That’s true for many including me..in fact I can say further, my expenses have also hardly increased by 15-20 % in last 3 years ...yes I had cut down few stuffs here & there... but I think that’s need of the hour..

My funda is simple - People 'll say what suits them but no one knows the future...If RE in pune doesn’t follow any logic then no one is wise enough to predict the future...play defense...save as much energy as you can save for the slog overs….even if you 'll not be a gainer ...you won’t be a looser either...
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Old May 14 2012, 11:17 AM   #10
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Quote:
Originally Posted by sheeshu View Post
Real estate for investment is a bad idea under the circumstances but end users cannot afford for prices to come down (or bubble to burst, so to speak). If your budget is permitting, take a plunge otherwise stay away. There has been a year long thread on gurgaon board forcasting "bubble" just round the corner, prices have moved up all the while.

For more please check this:
http://www.indianrealestateforum.com...ain-16152.html

I am not for these sky-high prices either but as prospective buyers the sooner we accept this reality the better it is. I am not going to say that the prices "will never" come down either and give endless justifications to support my case. If prices do come down 10-20 % , so be it, as long as I have a place to call home, it matters less if I am living in 1 crore home or a 50L home.
You are posting a year old link (posted on Feb 2011) of MANOJa. Anyway even if take that pediction, the prices showed upward trend till Oct 2011 after which they have relatively stagnated in many area (though not all). So nothing near to what can be called as bubble burst. So effectively such kind of post get created every six month or so just to be forgotten. As obvious nothing like that does happen. But then no one wants to talk about that prediction again and then some new post comes up stating something similar , but in different language.
 
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