I keep hearing numbers pulled out of thin air that RE appreciates annualy 20%, 30%,...50% take your pick.

I would rather prefer numbers to be based on real data. Gut feeling is good, but they are not reliable as our gut is formed based on what we consume!

Typically we read newspapers articles, listen to others..who have opinions similar to ours. So if we have a certain opinion we tend to filter out opposing opinion. So the point being that gut feeling is NOT objective data, but a very subjective guess.

The Indian Ministry of Finance releases objective numbers which shows that in Bangalore for instance from 2002-2007 RE prices rose 20% per annum.

1. We cannot extrapolate this overshooting period as the norm, we should base our numbers on the expectation that prices will revert to the mean, which means in 2008 and beyond the appreciation will come down. Bringing down the overall RE price appreciation over a longer period much lower than the 20%

2. The counter to this objective number could be that black money purchases might not be reflected in price appreciation. Infact this objective data has been getting numbers from public websites which the public uses to list their RE and also from banks based on their loan advances. So its not perfect but it tries to get an accurate number.

3. Ultimately prices goes up as much as people's salary which is captured in Per Capita Income. So the house price increase should be in line with income increase over a longer period of time. Per capita income takes inflation into account because as inflation increases income will also increase. As ultimately houses have to be purchased by people with incomes and if house prices rises more than income then how are people to afford it? And based on this metric Indian per capita income has only gone by 9% during the RE boom time of 2002-2007. So over a longer period of time RE will appreciate as much as per capita income growth.

In this post i am trying to get OBJECTIVE data. If you have objective data to back up your numbers do clarify any flaws in my understanding. As always do refrain from ad hominem responses.
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