Anyone think that the prices of flats will fall 40% from the mid 2007 prices ?
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  • Oops. Sorry!

    Originally Posted by ajithpkl
    Dear Wisemen,

    Just one point, If Mr.X is renting he can can invest his surplus money which otherwise would have gone towards his EMIs.

    I made a rough calculation as follows, please let me know if I am wrong.

    20L invested for 20 yr at 7% p.a will become 77L

    If he invest 28950 (he would have paid the same if he would have bought the house) less Rent; for 240 months @ 7% p.a= 63.74 L (I have assumed a total rent payment of 30 L over a period of 20 Yrs first two yrs constant at 8K and increased by 5% after that every year)
    Total cash networth would be 77+64=141L

    so, incase of buying his net out flow of 90L become 1.67C
    while renting the same 90L will become 1.41C
    However if Mr.X can invest the suplus funds in some other avenue which gives 8% p.a (like his RE) the same 1.41C will become 1.61C which is marginally lower than 1.67C.

    Your corrections are wellcome.



    Hello,
    Yes. You are correct. I had thought I'd included all possibilities. But failed to include the 29k less 8k into the credit side every month.

    Thats because when we do not have the need to put up 20k extra into an EMI we invariably find that the money somehow gets spent, I suppose!

    If you include it, then renting becomes even more of an attractive option.


    Regarding whether we will go the way of Japan!

    There is some comparison about population density in India and Japan (Japan its higher) and whether, since Japan had gone into RE bust, why not us too?

    Well, it is very unikely that India will see anything like the Japan OR US bust in RE. Thats for 2 reasons:

    1. Our people are very conservative and we are thrifty by nature - largely due to the shortage, socialist economy that we had all along. We are also a poor country. We also have one of the highest savings rate in the world. So, despite the recent greed factor being seen in RE, its unlikely that prices will run away downwards (recollect that the FM saw early trouble in RE and asked lenders and RBI to quickly throttle down in lending earlier this year).

    2. Our economic and financial governance is top quality. We have had the phenomenal luck of having some of the finest economists in the world as our RBI Governors, FMs and PMs.

    Unfortunately for both US and Japan, their corporate sector hijacked their policy and regulatory framework. I was recently reading the post about a small manufacturer a hedge Fund owner and a Financial Speculator (insert a big bank name here).

    In the US the manufacturer creates the jobs and propels the real economy by creating local jobs. But he ends up paying the highest taxes and has a crippling cost that he can barely run his business. The hedge fund has the highest tax breaks and can borrow the most and has absolutely no supervision (you can see the results). The speculator is not far behind in attractiveness in contrast to how much he conttributes to the real economy.

    You can now see why manufacturing has almost completely left the US and its now full of speculators and greedy financial manipulators and con artists (insert Madoff here :D).

    The powers that be, deliberately brought US to this situation by systematically manipulating regulation and law to make it happen.

    In India, we are far better. Though we have had the beginnings of a bust, its largely because of the domino effect of their problem. Our manufacturing is fundamentally strong. We still have the hunger to compete and grow. And we still have the desire to save (with this bust many, many youngsters who have gone the "pull-out-the-credit-card-by-20th" way thinking their salaries will grow forever will revert to slower spending and heathier savings. Easy money will be not so easy to come by and this is healthy.

    So, we may actually be saved from the worst of this depression and start out ahead when the next boom happens. And most importantly, we will miss suffering the 2 decade-long recession/depression that affects Japan and will soon affect the US.

    Thats my belief. And therefore there is today very few places like India to live in - Fairly good governance, generally peaceful and rule of law prevails, stable inflation, still growing reasonably - all things you can hardly find anywhere else in the world. But there is fear and confusion also about the near future, unmistakeably. This will take an year or two to dispel and prices will become affordable and then the next boom will come up. Be prepared.

    cheers
    CommentQuote
  • Originally Posted by wiseman
    Hello,

    Regarding whether we will go the way of Japan!

    There is some comparison about population density in India and Japan (Japan its higher) and whether, since Japan had gone into RE bust, why not us too?

    Well, it is very unikely that India will see anything like the Japan OR US bust in RE. Thats for 2 reasons:

    1. Our people are very conservative and we are thrifty by nature - largely due to the shortage, socialist economy that we had all along. We are also a poor country. We also have one of the highest savings rate in the world. So, despite the recent greed factor being seen in RE, its unlikely that prices will run away downwards (recollect that the FM saw early trouble in RE and asked lenders and RBI to quickly throttle down in lending earlier this year).

    2. Our economic and financial governance is top quality. We have had the phenomenal luck of having some of the finest economists in the world as our RBI Governors, FMs and PMs.

    Unfortunately for both US and Japan, their corporate sector hijacked their policy and regulatory framework. I was recently reading the post about a small manufacturer a hedge Fund owner and a Financial Speculator (insert a big bank name here).

    In the US the manufacturer creates the jobs and propels the real economy by creating local jobs. But he ends up paying the highest taxes and has a crippling cost that he can barely run his business. The hedge fund has the highest tax breaks and can borrow the most and has absolutely no supervision (you can see the results). The speculator is not far behind in attractiveness in contrast to how much he conttributes to the real economy.

    You can now see why manufacturing has almost completely left the US and its now full of speculators and greedy financial manipulators and con artists (insert Madoff here :D).

    The powers that be, deliberately brought US to this situation by systematically manipulating regulation and law to make it happen.

    In India, we are far better. Though we have had the beginnings of a bust, its largely because of the domino effect of their problem. Our manufacturing is fundamentally strong. We still have the hunger to compete and grow. And we still have the desire to save (with this bust many, many youngsters who have gone the "pull-out-the-credit-card-by-20th" way thinking their salaries will grow forever will revert to slower spending and heathier savings. Easy money will be not so easy to come by and this is healthy.

    So, we may actually be saved from the worst of this depression and start out ahead when the next boom happens. And most importantly, we will miss suffering the 2 decade-long recession/depression that affects Japan and will soon affect the US.

    Thats my belief. And therefore there is today very few places like India to live in - Fairly good governance, generally peaceful and rule of law prevails, stable inflation, still growing reasonably - all things you can hardly find anywhere else in the world. But there is fear and confusion also about the near future, unmistakeably. This will take an year or two to dispel and prices will become affordable and then the next boom will come up. Be prepared.

    cheers


    Dear wiseman,

    Wonderful. I liked your your above analisys very much, really logical and very useful. My regard & respect to "wiseman" increases day by day with his thought provoking and quite reasonable view points. Thank you for an yet another good analysis, that too in easy English.

    ks2071746 :)
    CommentQuote
  • thank you wiseman for the thourough analysis.

    The main indicators of RE bubble is (as per Japan bubble).
    Majority of the builders start building commercial complex malls and high end premium housing complexes.

    Today if you see in mumbai, there are malls for every 2 km's.
    Every residential will have a swimming pool, all modern unnecessary amenities and builder charge premium for that. There are hardly any new economy residential complex in both mumbai as well as bangalore.

    This is the striking similarity of RE bubble in india and japan.

    Fortunately in india, bubble burst very early, suppose if this boom had continued for another 2-4 years, we also could have faced the same situation as japan.
    CommentQuote
  • Compound wall height

    Can Anyone tell me maximum height of the compound wall and from which reference it is taken Both for CMDA(MAster Plan -1) and DTCP rules.In master Plan -1 it is said that maximum height of the Compound wall should not exceed
    1.5m but with reference from were the height is taken is not mentioned.
    Please could anybody clarify on heights with refrence to what are been taken both for CMDA and DTCP please.
    CommentQuote
  • Manufacturing in the US

    Wiseman,

    I enjoy your posts and wanted to point out few things I disagree with your thinking.

    A. Misconception that there is not much manufacturing in the US.
    US is still in number one or two producer for all these categories

    1. Cars US still produces atleast 7-8M cars/trucks per year,
    2. Planes, fighter planes, satelites, all space related stuff
    2 b. Largest weapons producer
    3. Worlds largest food producer
    4. Largest paper, wood producer
    5. 1M + Homes built every year with locally made material
    6. Largest meat producer, processer, dairy producer
    7. Largest coal production , power production,
    8. 3rd or 4th biggest steel, copper, aluminum millls
    9. 30% of crude oil, 70% natural gas produced locally. All oil filed equipment, rigs, offshore platforms are made locally
    10. Hollywood production
    11. Semi conductor design, manufacturing, test equipment manufacturing.
    12. Software programming, web development
    I have not listed all major categories but this will be good sample.

    Lot of the media focuses on just the visible items like clothing, toys, consumer electronics that gets made in China, India and Japan and say that there is little manufacturing left in the USA.
    Even when manufacturing is moved to another country, GM, Ford, HP, Dell, Intel, GE, Caterpiller own the manufacturing facility around the world and only the labor is local.

    B. High savings rate is not good for a country.
    Lots of people buy gold jewellery or keep hard cash in India instead of spending the money. Spending money creates economic activity (travel, buying gadgets, or investing in productive assests like mfg, design, etc). All the money invested in gold jewellery/ and kept as hard cash, has no economic impact to Indian economy except small benefit to people in gold trade.
    All the agri-land converted to Plots around Chennai with no hope of becoming a residential neighbourhood in the next 5 to 10 years are also total waste of land, a scarce resource in India.
    Many of the Asian countries have very high savings rate, but that did not help them grow faster.



    Originally Posted by wiseman
    Hello,
    Yes. You are correct. I had thought I'd included all possibilities. But failed to include the 29k less 8k into the credit side every month.

    Thats because when we do not have the need to put up 20k extra into an EMI we invariably find that the money somehow gets spent, I suppose!

    If you include it, then renting becomes even more of an attractive option.


    Regarding whether we will go the way of Japan!

    There is some comparison about population density in India and Japan (Japan its higher) and whether, since Japan had gone into RE bust, why not us too?

    Well, it is very unikely that India will see anything like the Japan OR US bust in RE. Thats for 2 reasons:

    1. Our people are very conservative and we are thrifty by nature - largely due to the shortage, socialist economy that we had all along. We are also a poor country. We also have one of the highest savings rate in the world. So, despite the recent greed factor being seen in RE, its unlikely that prices will run away downwards (recollect that the FM saw early trouble in RE and asked lenders and RBI to quickly throttle down in lending earlier this year).

    2. Our economic and financial governance is top quality. We have had the phenomenal luck of having some of the finest economists in the world as our RBI Governors, FMs and PMs.

    Unfortunately for both US and Japan, their corporate sector hijacked their policy and regulatory framework. I was recently reading the post about a small manufacturer a hedge Fund owner and a Financial Speculator (insert a big bank name here).

    In the US the manufacturer creates the jobs and propels the real economy by creating local jobs. But he ends up paying the highest taxes and has a crippling cost that he can barely run his business. The hedge fund has the highest tax breaks and can borrow the most and has absolutely no supervision (you can see the results). The speculator is not far behind in attractiveness in contrast to how much he conttributes to the real economy.

    You can now see why manufacturing has almost completely left the US and its now full of speculators and greedy financial manipulators and con artists (insert Madoff here :D).

    The powers that be, deliberately brought US to this situation by systematically manipulating regulation and law to make it happen.

    In India, we are far better. Though we have had the beginnings of a bust, its largely because of the domino effect of their problem. Our manufacturing is fundamentally strong. We still have the hunger to compete and grow. And we still have the desire to save (with this bust many, many youngsters who have gone the "pull-out-the-credit-card-by-20th" way thinking their salaries will grow forever will revert to slower spending and heathier savings. Easy money will be not so easy to come by and this is healthy.

    So, we may actually be saved from the worst of this depression and start out ahead when the next boom happens. And most importantly, we will miss suffering the 2 decade-long recession/depression that affects Japan and will soon affect the US.

    Thats my belief. And therefore there is today very few places like India to live in - Fairly good governance, generally peaceful and rule of law prevails, stable inflation, still growing reasonably - all things you can hardly find anywhere else in the world. But there is fear and confusion also about the near future, unmistakeably. This will take an year or two to dispel and prices will become affordable and then the next boom will come up. Be prepared.

    cheers
    CommentQuote
  • Originally Posted by wiseman
    Hello,
    Yes. You are correct. I had thought I'd included all possibilities. But failed to include the 29k less 8k into the credit side every month.

    Thats because when we do not have the need to put up 20k extra into an EMI we invariably find that the money somehow gets spent, I suppose!

    If you include it, then renting becomes even more of an attractive option.


    Regarding whether we will go the way of Japan!

    There is some comparison about population density in India and Japan (Japan its higher) and whether, since Japan had gone into RE bust, why not us too?

    Well, it is very unikely that India will see anything like the Japan OR US bust in RE. Thats for 2 reasons:

    1. Our people are very conservative and we are thrifty by nature - largely due to the shortage, socialist economy that we had all along. We are also a poor country. We also have one of the highest savings rate in the world. So, despite the recent greed factor being seen in RE, its unlikely that prices will run away downwards (recollect that the FM saw early trouble in RE and asked lenders and RBI to quickly throttle down in lending earlier this year).

    2. Our economic and financial governance is top quality. We have had the phenomenal luck of having some of the finest economists in the world as our RBI Governors, FMs and PMs.

    Unfortunately for both US and Japan, their corporate sector hijacked their policy and regulatory framework. I was recently reading the post about a small manufacturer a hedge Fund owner and a Financial Speculator (insert a big bank name here).

    In the US the manufacturer creates the jobs and propels the real economy by creating local jobs. But he ends up paying the highest taxes and has a crippling cost that he can barely run his business. The hedge fund has the highest tax breaks and can borrow the most and has absolutely no supervision (you can see the results). The speculator is not far behind in attractiveness in contrast to how much he conttributes to the real economy.

    You can now see why manufacturing has almost completely left the US and its now full of speculators and greedy financial manipulators and con artists (insert Madoff here :D).

    The powers that be, deliberately brought US to this situation by systematically manipulating regulation and law to make it happen.

    In India, we are far better. Though we have had the beginnings of a bust, its largely because of the domino effect of their problem. Our manufacturing is fundamentally strong. We still have the hunger to compete and grow. And we still have the desire to save (with this bust many, many youngsters who have gone the "pull-out-the-credit-card-by-20th" way thinking their salaries will grow forever will revert to slower spending and heathier savings. Easy money will be not so easy to come by and this is healthy.

    So, we may actually be saved from the worst of this depression and start out ahead when the next boom happens. And most importantly, we will miss suffering the 2 decade-long recession/depression that affects Japan and will soon affect the US.

    Thats my belief. And therefore there is today very few places like India to live in - Fairly good governance, generally peaceful and rule of law prevails, stable inflation, still growing reasonably - all things you can hardly find anywhere else in the world. But there is fear and confusion also about the near future, unmistakeably. This will take an year or two to dispel and prices will become affordable and then the next boom will come up. Be prepared.

    cheers

    Haha Wiseman turning bullish?
    Leaving that aside. Last week as I was in Madras, I could see the Housing Board flats being sold in the vicinity of Arcot road for 52L for 1230sqft or so. Around 4K psft for a Housing Board flat and you know what problems to anticipate in those. Also these are not really in Vadapalani or Saligramam. They are in places on the backside of MIOT hospital if I understood the map right.
    In other words, market is JUST NOT FALLING and the Wisemen around are only confusing potential buyers and making them miss the opportunity to enter at steady price now. At 4K for a flat and these MIG flats likely to use FSIs of even 3.5, you should imagine that price of land in these offtrack places behind MIOT have shot to 10K psft. So if I said price in Saligramam is 10K psft, I was actually underquoting I suspect.
    Be careful of the realestate bears. Wiseman talks that Indian market wont collapse like Japan or US but yet was using the same argument in contra to state that realestate will fall.
    In other words WIseman has clearly shown that he is in NEXUS with operators with serious reasons to bring down prices, so that his CARTEL can enter.
    BTW, Orange a silly property in Devanahalli in Bangalore is acting as if it is offering property for a song. In reality those prices are yet too high but nowadays gimmicks are used to sell at the old peak rates IF NOT AT A HIGHER LEVEL. So if you find good property in Chennai dont miss it.
    CommentQuote
  • THe housing board price is based on their advt in The Hindu Chennai edition!
    CommentQuote
  • Year-ender: Where should I invest in 2009?


    Source :


    http://ibnlive.in.com/news/yearender-where-should-i-invest-in-2009/81709-7.html


    Home buying: Can wait
    Outlook:
    Property prices are expected to fall further by 35 to 40 per cent in the coming six to eight months.
    Action:
    Investing in real estate for shorter period is a bad idea. Apart from further corrections, liquidity is very low, that is, it will be difficult to sell off quickly when you require the money. Moreover, if you have short-term time frame in mind, this is not the time to get into this asset class.
    If you want to buy a house to reside, experts from Knight Frank Property consultants recommend that you wait, if possible, for a year or so and consider living in rental property.


    PS : As per the market researchs this in not only a right period to buy a Flat/Plot but even not to invest on anything :o.


    Raj
    CommentQuote
  • Originally Posted by vijai5
    Dear wisman

    What are the chances of indian RE will go the same way as japan,will there be a lost decade in india too.

    Do you know something? IN Japan in the 80s they expected price to fall and it kept rising. That is when Japan became a developed country. India is just in that journey. So if you think INdia will become Japan of 2000s even before it became Japan of 1980s, it shows you are a born pessimist and obviously you will be a follower of BEAR KING who calls himself Wise. LOL!
    CommentQuote
  • Guys ,

    Have you seen the biggest fool in the world who still claims RE is safe pet now.

    http://economictimes.indiatimes.com/Real_Estate/Property_rates_to_fall_by_15-20_more/articleshow/4067223.cms

    Property prices will fall further by 15-20% in the next three months, DLF vice-chairman Rajiv Singh said on Monday. India's largest real estate company — DLF, which reported a 69% decline in profit for December quarter.

    When these RE guys themselves accepted 15-20 % ...the real fall could be minimum of 2 times.

    When the leading RE company itself endorses 15-20 percent further fall , there are few fools still claiming that its a good pet.You can see the Fool King blabbering in all the forum .

    Its better to be in Bear Cartel than being in a Fools Cartel.

    There is no sign of RE uptrend in the next 3-4 Years as there is no sign of turnaround of the recession.

    Pls keep your money in your safe hand than passing to the Fools hand.

    Cheers
    CommentQuote
  • Get you facts right lest you be branded half-baked

    Originally Posted by Natarajg007
    Do you know something? IN Japan in the 80s they expected price to fall and it kept rising. That is when Japan became a developed country. India is just in that journey. So if you think INdia will become Japan of 2000s even before it became Japan of 1980s, it shows you are a born pessimist and obviously you will be a follower of BEAR KING who calls himself Wise. LOL!



    Dude,

    Japan's property bubble is exactly the one faced by the US today. And this bubble was so huge that Japan is in recession for the last 19 years!!!
    And this was done by Japanese banks refusing to let bad assets crash and pumping them up so that, even after 19 years, no one knows what they are worth. RE prices today are as low as they were in the 1980s. The stock market index Nikkei at its peak was over 36000 in the late 80s. Today it is as low as 8000+, 19 years later!!!

    So, by comparing India and egging it on to reach those heights, do you want us too to get into this situation? Extremely BAD comparison!!!

    Besides, Japan was not developing in 1980s. If you get your history straight, Japan was considered a developed country even as early as 1905, when they comprehensively defeated the Russian Navy (considered the most powerful navy in the world then) in the Battle of Sushima Bay, thereby establishing themselves as a modern, developed country even then

    Always check your facts. And also read up a bit so it helps you get a better perspective and does not make you look silly! And worse, it misleads and misguides all the youngsters on this forum into making all kinds of wrong decisions, like the ones you are making.

    Take care

    cheers
    CommentQuote
  • Originally Posted by GoccaMacca
    RE prices will drop by 80% if the IT sector is removed from the country. We all will go back to our basic values and India would be a better country.


    Exactly. I support this idea
    CommentQuote
  • Originally Posted by Nataraajg007
    Exactly. I support this idea


    In your dreams. Even if Obama levies humongous taxes on outsourcing, many american companies will keep outsourcing because they cant pay peanuts in the US of A even for silly jobs as they do now in India.
    It is all set between US and India, maybe the outsourcing numbers may go down, but I'd say it is an absurd thinking that IT will be wiped off from the country. Get a life, consult the welder, get your top floor treated(oops welded) and think straight!
    CommentQuote
  • Originally Posted by Nataraajg007
    Exactly. I support this idea


    And I've started hating your wacky one liners. Initially it was fun though!
    CommentQuote
  • Originally Posted by Nataraajg007
    Exactly. I support this idea


    Dear friend,

    India can become a better country only if: (a) 2 party system comes in force (b) every Indian treats any fellow Indian of any caste or creed the same as his caste or creed (3) Corruption goes out of the country (4) People believe in hard work and not in only talking big and not doing much (5) People first must have self descipline and obey the laws of the country (6) Bueractrats to become country welfare/people welfare centric than self centric/political bosses centric etc/. etc. the list will go on.

    ks2071746:D
    CommentQuote