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Are Real Estate Prices Going To Fall 40% by Mid 2007?

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Are Real Estate Prices Going To Fall 40% by Mid 2007?

Last updated: February 21 2009
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  • #11

    #11

    Re : Are Real Estate Prices Going To Fall 40% by Mid 2007?

    Ah Wiseman. U r worked up mentally but ingenuity is a missing link in you by birth I suspect. Now u seem to be telling that U WANT INDIA TO GROW AT HINDU GROWTH RATE. Sounds like u dont want India to grow and maybe as you dont care about this country u want others to lose out too.
    People like you no longer matter to this country and those NRIs who came crashing looking for shelter in India in the past 3 years. Now you must be probably in that breed, having lost your job in US and now your home in US being sold for 2 cents, you are asking Chennai realestate to crash to 2 cents so that you can have a home of you own.
    I PITY YOU.
    As for 30% crash in flat price will bring 30% crash in land price, shows you just dont know mathematics one bit. Thing of that imaginary school which you rated second and ahead of IIM C. What a pity? Let us assume land price is 7000psft and construction cost is 1200psft. If flat price collapses by 30% calculate the collapse in land price. It will depend on the ratio of land to construction cost as also how much money is being sucked out by unscruplous builders. Also depends on how much margins NRIs stuck into the deal 2 years ago and how many escaped and how many were left expecting to buy later at 2cents like you!
    Finally do take a look at the post below. It will let u know that u and ur american nris might have to work for me and my indian peers in due course probably cleaning our cars!

    Article from 99acres

    Decrease in Residential Property Prices By 5%
    With the ongoing slowdown in the Indian real estate industry and correction in secondary markets, some of the major cities have witnessed up to 5 per cent fall in capital values in residential properties, a Cushman & Wakefield (C&W) report said. According to the report, the high - end residential market of Pune has seen a decrease of 5 per cent in capital values during July-September period, while it fell by 1 per cent in the mid-range category. Other prominent markets, like Mumbai and Bangalore, witnessed a fall of 4% and 3% respectively in the mid-range housing sector, it added. However, a few locations in Chennai have witnessed appreciation in capital values by up to 8 per cent. "Most markets are predicted to continue to have stable capital values with a softening bias in the last quarter of 2008, with the exception of Chennai which may see some further strengthening in key micro markets. A lacklustre festive season, along with sharp drop in the stock markets have further aggravated the situation for developers, who are also battling conditions such as high rates of servicing debt and liquidity issues," C&W India Director (Residential Services), Ms Aditi Vijayakar said. Such conditions have led many developers to re-align their strategies and several developers may be now looking at targeting the middle-income groups, where the demand is high and mostly driven by end-users, she added.
    4 Nov 2008 indianrealtynews.com

    Cheers

    Comment

    • #12

      #12

      Re : Are Real Estate Prices Going To Fall 40% by Mid 2007?

      Say something original instead of parroting Industry Shills

      Originally posted by Natarajg007 View Post
      Ah Wiseman. U r worked up mentally but ingenuity is a missing link in you by birth I suspect. Now u seem to be telling that U WANT INDIA TO GROW AT HINDU GROWTH RATE. Sounds like u dont want India to grow and maybe as you dont care about this country u want others to lose out too.
      People like you no longer matter to this country and those NRIs who came crashing looking for shelter in India in the past 3 years. Now you must be probably in that breed, having lost your job in US and now your home in US being sold for 2 cents, you are asking Chennai realestate to crash to 2 cents so that you can have a home of you own.

      Cheers

      You must be the congenital idiot. Natraj (you vocabulary also seems to be weak, like you intellect and intelligence). The word for "from birth" is congenital. But then, for someone who can't hold 2 pieces of information in one brain at one time - forget math - how is that possible?

      As others have said in this post (and I think the IIT you passed out of must be Idiot's Institute of Technology :p), why can't we see even A SINGLE ORIGINAL PIECE OF ARGUMENT THAT SEEMS TO APPEAR LOGICAL TO ANYONE?

      Except for firing off arguments based on faulty and magical premises like "flat prices will remain fixed" (the actual mathemtically accurate term for it is "constant" and not "fixed"; for one who berates other's math, your knowledge of mathematical terms seem to be woefully inadquate if not pathetically poor!) there has not been a single originally thought out piece of logic.

      You must be a complete washout man. And also waiting for the price decline to wash out what little you may still possess! God help you.

      cheers

      Comment

      • #13

        #13

        Re : Are Real Estate Prices Going To Fall 40% by Mid 2007?

        Originally posted by wiseman View Post
        You must be the congenital idiot. Natraj (you vocabulary also seems to be weak, like you intellect and intelligence). The word for "from birth" is congenital. But then, for someone who can't hold 2 pieces of information in one brain at one time - forget math - how is that possible?

        As others have said in this post (and I think the IIT you passed out of must be Idiot's Institute of Technology :p), why can't we see even A SINGLE ORIGINAL PIECE OF ARGUMENT THAT SEEMS TO APPEAR LOGICAL TO ANYONE?

        Except for firing off arguments based on faulty and magical premises like "flat prices will remain fixed" (the actual mathemtically accurate term for it is "constant" and not "fixed"; for one who berates other's math, your knowledge of mathematical terms seem to be woefully inadquate if not pathetically poor!) there has not been a single originally thought out piece of logic.

        You must be a complete washout man. And also waiting for the price decline to wash out what little you may still possess! God help you.

        cheers
        Blowing your top will not mean that others will conceded. U have a strong tendency to avoid questions about you, a tendency to scream at something you dont understand and then try to call yourself wise. God save the poor visitors on this forum for having to deal with you. I wont aggravate your pain as regularly as I am doing now, so that you dont have to take more valium. After all you are already hallucinating about realestate crash in Chennai.
        As for calling IIT by names. I am sorry. As an IITian I dont need to defend it. There are 200K high brained folks wanting to get in there and while 5K or so sneak in today in my times it was 1190 that was the last rank into IITM. So I wont fight with you on that. However please do let this board know where you passed out off. You are trying to tell us a big lie about your background is what I suspect.
        Ok I think if you read more of my writings to you, the local medical shop will run out of valium. So I will desist from answering your banterings. However comeback tommorow and let us know WHO U R that U talk as if u r the owner of Realestate and AS IF U KNOW ANYTHING about ECONOMICS. If U lost your job a couple of years ago in US and u came home, just relax. Maybe your children will find their way to US in the next many years. So relax...be calm.
        Bye.

        Comment

        • #14

          #14

          Re : Are Real Estate Prices Going To Fall 40% by Mid 2007?

          I have gone through couple of these cycles myself, in US as well as in India. Property that I bought in mid '80, was available at half the price in mid 95.
          In '93-94 a DLF Phase-II, 215 sq. yd house was at Rs 25 lakh, in todays price it is 2.5 crore.
          During Mumbai property crash, 2-3 BHK flats in Malad, Guregaon, Kandivali were easily available for 13 lakh to 30 lakh. At today price these are at 60 lakh to few crores.
          Around '98, 300 sq. yd builder floor in South Delhi were available for 50-70 lakh range. At today price, these are quoted at 3 to 5 crores.
          In 2003, a 100 sq. yd builder floor in one South Delhi area, was available for Rs 10 lakh, at todays price, similar property is quoted at Rs 60 lakh or more.
          After price crash, I have seen properties been sold at same price that were at the beginning of previous boom.
          Self used property owner, realistically sees an average of 10-12% yearly return over 10-15 years time period.
          An property developer/investor can rake in high profits in a rising property market. However, when market crash, they crash with double impact taking down all those who are in the business.
          Basically, to grow the wealth consistently you need considerable skills. In property business (and also stock market), is relatively easy for common person to enter and make money. But stakes are very high as there are lots of people with lots of money. All of them want to make quick bucks. By simple logic, it is not possible for someone to keep amassing wealth without someone else losing it. So things have to correct.
          Once greed forces developers to drives profit up and investors gets in there like hungry sharks, there is nothing left in short period of time.
          When there is no speculation, prices are determined by buyer and seller. These set realistic market prices.
          Yes, there are lots of people who need property in India. However, you cannot sell a property to someone who can't afford to buy it. If those who cannot afford, are lured to buy at artificial prices, they leads to a bigger problem, as we see subprime crisis in US.
          Property prices mainly rose to un-realistic level mainly because property changed many investors hands, every time previous one raking in some profit in short period of 2-3 months. Builders saw that investors are making so much money, why they can’t. They started raising prices every few months in tune with investors. There is a limit to which you can increase price of any asset. When that price value reached, buying selling came to standstill. In this process property prices reached to a level, which are many times above the affordability level of someone who is willing to pay its right price.
          I believe there will be biggest ever crash in Indian property market in months and years to come because prices levels are so much more the affordability levels. It is sad, everyone is going to suffer, builder, investors, banks, people involved with property business, and poor people who were lured to buy property at inflated prices.

          Comment

          • #15

            #15

            Re : Are Real Estate Prices Going To Fall 40% by Mid 2007?

            Hi Wiseman,

            I am Salim (a_salim_99) taken another avatar, as the admin has blocked and removed my id on suspicion of spamming the forum. I was trying to post the same content multiple times and paid the price. I joined the forum again, to participate and share my thoughts.

            May be I will raise some questions or thoughts over the weekend. (Nag)

            UscoKumar,

            I am new to real estate for that matter investments as a whole. My problem is this have gone pear shaped when I am *ready* to make a purchase and I am itching to spend my savings esp., towards buying a house. The more I know the more I am advised to wait and watch. What would you do if you were in my situation (simple question) ?

            Comment

            • #16

              #16

              Re : Are Real Estate Prices Going To Fall 40% by Mid 2007?

              Please ignore my typo and mistakes in my post.

              I had to try several times before I could post a message and in the process I lost the plot and is riddled with mistakes and half of my post does not make sense anymore even to me !

              Thanks,
              Salim.

              Comment

              • #17

                #17

                Re : Are Real Estate Prices Going To Fall 40% by Mid 2007?

                No problem. I read you clearly

                Originally posted by connect2sam View Post
                Please ignore my typo and mistakes in my post.

                I had to try several times before I could post a message and in the process I lost the plot and is riddled with mistakes and half of my post does not make sense anymore even to me !

                Thanks,
                Salim.

                Dear Salim (and all the others on this post),

                I cannot appreciate one thing - though I understand it.

                Why are all you people SO KEEN ON THROWING AWAY YOUR SAVINGS in double quick time!!!

                Its all to do with this Western, immediate-satiation craze that has caught you people and ruining you all (me too sometimes ).

                As UscoKumar said, growth of Assets like Property is only 10 - 12 % long term compounded. In between it goes like a yoyo, swinging wildly up for a few years and then down for a few. So, you got to have considerable skills and apply it consistently to make your wealth grow solidly. The best way to grow wealth is to put it in areas you understand best at low prices and give it time to grow! There is no substitute for this!

                Simple answer to simple question regarding what to do with your savings.

                The only asset that will give substantial growth in the next 4 years will be bullion. Buy Gold (and silver to a lesser extent). Do not buy paper gold (ETF, Gold Bonds and other promises with underlying gold). Buy physical Gold. As far as possible, buy Hallmarked Gold. This comes minted in switzerland or wherever, has a certificate of purity from the World Gold Council and is generally accepted anywhere in the world at low discounts. Instead of Bars, buy coins - the best ones are Krugerands (SouthAfrican currency), Maple Leaf (Canada), etc. Do not put more than 25% - 40% of your savings in Gold. Keep the rest in safe fixed income securities. The Rupee's buying power will increase quite a bit vis-a-vis $$$ in next few years.

                There are reasons for my being so bearish on Land, Property and every other asset other than Bullion. This Bear Market will probably go on till 2010 - 2012. America will get terribly impoverished. The Dollar is headed (technically) for the exchange rate of Rs 25 - 30 per dollar (thats 50% of today's rate). At this rate, all our Export Industries will get devastated and I believe almost all profits will be lost. Import bill will soar - especially crude oil. Our balance of payment will become critical and we may end up at the same level as early 1990s as far as Foreign Exchange reserves go.

                IF this happens - and there are a whole lot of incredibly smart and experienced Economists and other wise people who believe this is inevitable - then I'm afraid Real Estate will go much below even my deadly levels of decline (50% to 80%) and stay there for quite some time to come before recovery.

                Btw, Gold, which has gone from $230 per ounce in 2000 to $810 today will probably reach anywhere from $3000 - $6000 in this timeframe!!! Buy it gradually, every month one coin of 5g to 10g, whenever price in market declines a bit. In anycase, buying Gold will also get other's support since Gold is the only asset that has higher standing than Land in our society.

                This is my simple advice. I follow my advice. You must take your own decisions.

                cheers

                Comment

                • #18

                  #18

                  Re : Are Real Estate Prices Going To Fall 40% by Mid 2007?

                  Your post suggests a substantial change in the mind set we've held in the past 5-6 years. I have seen only .com bubble. I do think this is way too worse than that. But what you are saying is in essence doom and gloom.

                  You mean gold could be the next multi-bagger (a word that you can hardly use for the next few years). Well my savings is in NRE/NRO accounts in India. I would prefer to buy physical gold using that fund. If so what options do I have i.e., how do I buy physical gold in India through Internet sitting in London ? Or any other options that come to your mind ?

                  Comment

                  • #19

                    #19

                    Re : Are Real Estate Prices Going To Fall 40% by Mid 2007?

                    Hi Salim,
                    Do you want to buy real estate for investment purpose? or for own use?
                    If its for investment purpose, I second wiseman's suggestion. But if it's for own use, I have something else.

                    Reason is, you are not going to see any profits or loss till you sell it! If you buy for own use and have no reason to sell it, then atleast you can buy, esp so, as it's not through bank financing but through your own money. But you can use the downward spiral to do the following.

                    1. A property that not only satisfies your current needs, but also futures'.
                    Like a great school for the kids, a tennis coaching academy etc. As the
                    decline is going to affect ALL kinds of properties, following this will
                    greatly reduce your necessity, if at all, to sell the property in distress.

                    2. Hand pick the property that you like without hurrying to buy. This has
                    already become a buyers market and gone are the days a few days of
                    wait would make the builder hike the price or someone grab it!
                    Last edited December 1 2008, 04:07 PM.

                    Comment

                    • #20

                      #20

                      Re : Are Real Estate Prices Going To Fall 40% by Mid 2007?

                      Originally posted by wiseman View Post
                      Dear Salim (and all the others on this post),

                      I cannot appreciate one thing - though I understand it.

                      Why are all you people SO KEEN ON THROWING AWAY YOUR SAVINGS in double quick time!!!

                      Btw, Gold, which has gone from $230 per ounce in 2000 to $810 today will probably reach anywhere from $3000 - $6000 in this timeframe!!! Buy it gradually, every month one coin of 5g to 10g, whenever price in market declines a bit. In anycase, buying Gold will also get other's support since Gold is the only asset that has higher standing than Land in our society.

                      This is my simple advice. I follow my advice. You must take your own decisions.

                      cheers
                      Wiseman, nice post once again. I have a question though.

                      Regarding Gold, i don't know how you came to this conclusion. If gold reaches anywhere between $3000- $6000 in a short period (< 5 years), then either $ value has to drop(at least 50%) drastically against all currencies or Gold will NOT be priced or pegged(i don't know if this is right word) in US $. Do you think it will happen within the next 4 to 5 years?

                      Rupee value against US dollar was around 48 and 49 back in 2001 and 2002. Gold price at that time was hovering around $200-350. Gold appreciated 5 times or 500% between 2002 and 2008. But dollar against rupee has depreciated just around 25% (FY02-08). Now do you think US $ loosing 50% of its value will increase the Gold value to $3000 to $6000?

                      If that’s the case then Gold would appreciate another 500% to 800%? Can you show some numbers so that I can better understand this theory?

                      Thanks once again for your excellent post.

                      Comment

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