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Property Price Trends in Chennai

Last updated: July 14 2020
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  • Re : Property Price Trends in Chennai

    Originally posted by ramki830 View Post
    It was a mistake but do you seriously think politicians (across world) are ready to acknowledge that?

    IMHO, politicians in all democracies love asset inflation and easy money. India is no exception and we will see lower interest rates. But not in near future. 2002-07 period in India was possible because the preceding period (1997-2002) saw very high inflation virtually driving out all speculation and also helping to clean the BS of all big lenders.

    I remember reading Aswath damodaran who said that in Long Term lending rates in India should converge with the rates in developed nations. But that is some decades away, but surely we will see lower rates in future.
    I agree with your views.

    Monetary easing is forcing us with less choice.

    Comment


    • Re : Property Price Trends in Chennai

      I have made a calculation of the flat I am currently living in Velachery.

      Cost of the Flat : Rs. 5000000

      Say 50% is loan amount : Rs. 2500000
      Total interest payable for : Rs. 2500000
      10 yrs 10%
      Money paid from hand : Rs. 2500000
      Total : Rs. 7500000
      (This excludes all other expenses for
      maintenance etc)

      Rent I am paying now : 12000 / month

      Cumulative annual rent for 10 yrs : 150000
      10% increase every year 165000
      181500
      199650
      219615
      241576
      265733
      292306
      321536
      353689
      Total collected as rent 2390605 ~ 2500000

      Now the owner has got only 1/3 rd of the total value of the property. To completely recover the it will take atleast 10 - 12 more years which makes it an average of 20 years (say)

      I have not calculated the loss of interest on the 25 lakhs that he had invested from hand. When I made all these claculations I really don't understand why people think that investing in RE is lucrative. Please don't tell me that the market value of the property will rise and if he sells then it would be good. If a guy who buys a property@50 Lakhs takes 20 yrs to recover the investment alone then what would happen to the one who buys it at even higher rate.

      This leaves me completely puzzled.

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      • Re : Property Price Trends in Chennai

        The investor is hoping that he'll sell it for a much higher rate, the rate of appreciation in the last 5 yrs has been much more than the interest he is paying.
        All the rental income he is getting meanwhile is just an extra money.

        Also if you had missed buying a flat in Velachery 5 yrs back, chances are you are never going to afford buying in Velachery anymore unless you had a brilliant career streak and made lot of money. After a few years if you decide to buy a house, will have to contend with buying it in Sholinganallur or Kelambakkam or worser still, Sriperumbudur or Oragadam. For the rest of your married life, one of the constant complaint you'll hear is how stupidly you had missed a golden opportunity to buy house in heart of the city like Velachery.

        PS: When I mean "you" I didn't mean you personally, just used it to refer a person in a similar situation

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        • Re : Property Price Trends in Chennai

          Originally posted by iconic View Post
          Please don't tell me that the market value of the property will rise and if he sells then it would be good.
          Why shouldn't we tell you market value will rise??
          Last edited August 2 2012, 04:09 PM.

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          • Re : Property Price Trends in Chennai

            @iconic: Along with @love4land's words, a few corrections: the interest amount comes to only 14 lakhs, over 10 years on a 10% RI + there could be tax benefits. Property prices are not predictable with smooth curves! A few local factors, say a popular IT park, a good 6 lane road, or a famous school can suddenly shoot up prices. History tells us that almost every good locality has had such spurts once or twice in a 10 year period. The same applies for your 10% formula for rents. You may increase the rent by 10% for a continuing tenant. But when they vacate and a new tenant shows up, often a jump is not just a 10%.

            Comment


            • Re : Property Price Trends in Chennai

              @Love4Land

              Eventhough velachery is having great appreciation I don't regret for not buying as it is one of the worst areas in terms of roads in interior areas, current traffic conditions, low voltage EB, flooding in rainy seasons etc. It has gained status only because you don't have a better place in its surroundings. The public infrastructure is lot to desire for the money it demands.

              Originally posted by Love4land View Post
              Why shouldn't we tell you market value will rise??
              Just read the line below, I have a question on that. If some one buying @50 lakhs takes 20 yrs to earn it back what would happen for some who buys at a higher cost.

              @murugesh

              You are right 10% at diminishing would come upto 14 lakhs - tax benefits we can assume that to be 10 Lakhs. In the case of total investment 25 lakhs from hand there is a loss of interest. Considering an FD @8% for 10 yrs = 20 Lakhs.

              On the trend of rents, I accept there will be hikes but there are also lean periods where in you may have the house locked without renting. The calculation is just based on average.

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              • Re : Property Price Trends in Chennai

                In last 10 years, Velachery 2-bhk went from 20-25L to 50L.

                Now if it goes to 1C in next 10 years in 2022, I wouldn't be surprised.

                Rent is just additional yeild to supplement the capital value increase.

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                • Re : Property Price Trends in Chennai

                  Will it be possible to get 2bhk apartment at proper Velachery ?
                  It sounds too less


                  Originally posted by k11 View Post
                  In last 10 years, Velachery 2-bhk went from 20-25L to 50L.

                  Now if it goes to 1C in next 10 years in 2022, I wouldn't be surprised.

                  Rent is just additional yeild to supplement the capital value increase.

                  Comment


                  • Re : Property Price Trends in Chennai

                    Originally posted by braveman View Post
                    Will it be possible to get 2bhk apartment at proper Velachery ?
                    It sounds too less
                    I do not know what an actual resale 2-bhk costs, 50L is a rough estimation from @iconic.

                    New ones are at 90L I think.

                    Comment


                    • Re : Property Price Trends in Chennai

                      Chennai Rental/ Capital Values - 2012 Q2

                      I would like to share this link about Chennai Rental/ Captial values as of 2012 Q2
                      http://www.cushwake.com/cwmbs2q12/PD...i_res_2q12.pdf

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