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Real Estate bubble in India

Last updated: June 30 2013
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  • #21

    #21

    Re : Real Estate bubble in India

    Missed the important point again!

    Originally posted by Natarajg007 View Post
    As a corollary it makes sense to hold onto RE if you bought it at low levels and if you are convinced that the population density in major cities especially Chennai and Bangalore wont reduce and that development wont happen in Indian suburbs easily.
    PS. Unless our population suddenly disappears need for land wont decrease. Unless all the poor in our country have a roof on top, need for houses wont decrease.

    You have a knack of regularly missing the important point and instead mouthing off inane, obvious stuff that anyone can come up without even thinking. Here is another example:

    No one is arguing that the poor do not need a roof over their head - and the more the people, more the housing needed. It does not need a genius to figure that one out!

    But by attempting to connect that fact that the many poor in India need a roof over their head and therefore exorbitant housing prices will not go down to realistic levels shows utter lack of clarity of thought as well as reasoning ability.

    The very fact that there are many poor homeless people and at the same time there are lakhs of dwellings which are not finding buyers at high prices points out the the incontrovertible conclusion that prices are too high, unaffordable and therefore must come down - simply because its much harder for incomes to go up, which is the other way the housing becomes affordable!

    Got it Nats?

    cheers
    Last edited by wiseman; July 13 2009, 03:35 PM.

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    • #22

      #22

      Re : Real Estate bubble in India

      the real estate boom was fueled by (1) easy availability of bank credit and (2) rise in salaries which made borrowers eligible for higher loans....this led to rise in prices in multiples.

      Now,

      (1) with fiscal deficit reaching 6.8% and revenue deficit reaching 4.98%.....government itself is borrowing heavily for infrastructure & rural emplyment schemes....(it would make sense to buy FMCG shares though)
      (2) now corporates and individuals will have less funds from banks as most of the debt is going to government which is competing with them for funds.
      (3) In this scenario...interest rates would rise in next 6 months for home loans.
      (4) But job market is still bad....(just yesterday siemens IT systems fired 500 in bangalore....they were one of the earliest IT MNCs who set up in early 1990s in bangalore)
      (5) even if offshoring increases to india due to furthur slowdown in west.....salaries offered may come down as offshore prices are much lower...with more staffs in offshore even IT companies have to reduce salaries no doubt.
      (5) A job market where take home salaries will come down in coming years coupled with rising interest rates in next 6 months duration.......is a perfect recipe for urban real estate disaster.

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      • #23

        #23

        Re : Real Estate bubble in India

        Originally posted by Natarajg007 View Post
        PS. Unless our population suddenly disappears need for land wont decrease. Unless all the poor in our country have a roof on top, need for houses wont decrease.
        sorry nats, poor people in our country needing a roof over their head is not the reason to charge 40,000 Rs /sq.ft in south mumbai. Its a shame that mumbai which has 50% of population living in slums has flats going at 40,000 Rs./sq.ft.

        Mumbai explains india's irony... people both well-to-do and poor go to mumbai in search of jobs...well-to-do live in flats working in financial capital of the nation...poor live in slums having some petty jobs for livelihood

        Atleast, i appreciate this budget presented by Mr.Mukerjee as he is far more matured than Mr.P.Chidambaram......By deciding to concentrate on rural jobs we can infact (1)eliminate slums in mumbai as poor can stay back in their small towns, villages (2) even RE prices in mumbai will fall as less money will be available to punters since more money goes to rural spending.
        Last edited by contra; July 13 2009, 10:53 PM.

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        • #24

          #24

          Re : Real Estate bubble in India

          Indications are that bank interest rates will go up in another 6 months which will dampen home loan markets further

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          • #25

            #25

            Re : Real Estate bubble in India

            Originally posted by contra View Post
            sorry nats, poor people in our country needing a roof over their head is not the reason to charge 40,000 Rs /sq.ft in south mumbai. Its a shame that mumbai which has 50% of population living in slums has flats going at 40,000 Rs./sq.ft.

            Mumbai explains india's irony... people both well-to-do and poor go to mumbai in search of jobs...well-to-do live in flats working in financial capital of the nation...poor live in slums having some petty jobs for livelihood

            Atleast, i appreciate this budget presented by Mr.Mukerjee as he is far more matured than Mr.P.Chidambaram......By deciding to concentrate on rural jobs we can infact (1)eliminate slums in mumbai as poor can stay back in their small towns, villages (2) even RE prices in mumbai will fall as less money will be available to punters since more money goes to rural spending.
            Are we talking about what is good for people or what will happen? I have always been doing the latter. As for the former I believe that salary increase in the 2004+ period has brought lots of misery to the depressed section of society. However greater salary will always make the rich grow richer and the poor poorer.
            Economists and Physicists who it as the bubble paradox. Unfortunately Wisey and you seem to always argue without knowing what your argument is. Contra I will be happy to see you a bull or a bear, but your sudden change makes it look like you want to talk something, not something you know. U r free to do it!

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            • #26

              #26

              Re : Real Estate bubble in India

              Originally posted by Natarajg007 View Post
              Contra I will be happy to see you a bull or a bear, but your sudden change makes it look like you want to talk something, not something you know. U r free to do it!
              Yes, people are changing seeing the realities. After few months you also will change and sell your plot at correct market rates as a bear

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              • #27

                #27

                Re : Real Estate bubble in India

                Originally posted by lovebird View Post
                Yes, people are changing seeing the realities. After few months you also will change and sell your plot at correct market rates as a bear
                selling our own properties is our individual decisions.

                If its for living their is no need to sell (provided it was bought at affordable rate with small loans which was repaid quickly).

                If it was bought as speculation...expecting super returns to get rich quick.....than one has to pay for their own bad decisions.

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                • #28

                  #28

                  Re : Real Estate bubble in India

                  In early 2006 at bangalore, some chaps in age group 24-28 took home loans with 15-20 year terms from their favorite banks like icici bank. The loans where so high and when asked how they got guts to take these huge home loans while still young and working in BPOs, IT firms...are they so sure of their jobs. They replied in 2-3 years property rates will double, triple and we will sell to others & transfer the home loans. We will just enjoy the profits.

                  Now in 2009,

                  (1) the property prices in bangalore have not even doubled since end of 2006, forgot tripling. So these chaps haven't got the profits they wanted.
                  (2) some have lost their jobs....some are about to lose their jobs. still the loans are remaining for another 12-17 years.
                  (3) not able to sell at profit...not able to properly repay loan ....this is catch 22
                  (4) even icici bank is worried about these chaps and doesn't want to reduce the interest rates...and is also cutting their credit card limit.

                  Even in chennai such chaps are there...but chennaites being more conservative such chaps are minimum. But is bangalore where people are show-offs situation is worst.

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                  • #29

                    #29

                    Re : Real Estate bubble in India

                    Originally posted by contra View Post
                    In early 2006 at bangalore, some chaps in age group 24-28 took home loans with 15-20 year terms from their favorite banks like icici bank. The loans where so high and when asked how they got guts to take these huge home loans while still young and working in BPOs, IT firms...are they so sure of their jobs. They replied in 2-3 years property rates will double, triple and we will sell to others & transfer the home loans. We will just enjoy the profits.

                    Now in 2009,

                    (1) the property prices in bangalore have not even doubled since end of 2006, forgot tripling. So these chaps haven't got the profits they wanted.
                    (2) some have lost their jobs....some are about to lose their jobs. still the loans are remaining for another 12-17 years.
                    (3) not able to sell at profit...not able to properly repay loan ....this is catch 22
                    (4) even icici bank is worried about these chaps and doesn't want to reduce the interest rates...and is also cutting their credit card limit.

                    Even in chennai such chaps are there...but chennaites being more conservative such chaps are minimum. But is bangalore where people are show-offs situation is worst.
                    As far I know in Bangalore flat prices in 2009 is more or less same as in 2005 in some areas like marathalli,whitefield,itpl etc.

                    Bangalore lead chennai in boom same holds good for bust.

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                    • #30

                      #30

                      Re : Real Estate bubble in India

                      Originally posted by wiseman View Post
                      BigBear,

                      Though this might be seen as a free service, here goes!

                      The last 2 turns of the market, I got it right (and lucky) 2 out of 2 times.

                      What you probably meant by "You can become lucky twice but surely will not work out majority of time" was that you cannot get it right all the time!

                      But assuming that you meant what you said, I will attempt to prove to you that you actually can get it right a majority of the time. The art is called Technical Analysis and I follow various techniques, now mainly the Elliott Wave technique, which has so nicely provided turning points correctly.

                      Both these times I had mentioned the turning points (approximately) before the event and took some profitable decisions. To prove the point to you, I will mention each time in future, my expectation of the turning point before the event and we can check it out afterwards to see if it was right or wrong.

                      What do you say, after 10 such calls, shall we tally it up and see if we indeed cannot time it right a majority of the time? And for those on the forum who are willing to believe me and take the risk on themselves, maybe this is a free service?

                      Now here is the first call. This decline will take the first break around 3600-3700 and may stage a rally. I'm still not calling that point as a turning point because this blessed monsoon is still playing games. I'm saying that this decline will likely stop around that level. Once the monsoon gives final signal, I will be able to come up with final answer. If it fails, the next stop is 3300-3400 levels. Time will tell!

                      cheers
                      Wiseman,
                      Nifty has touched 4240 today and it confirms the fact noone can time the market in short term.Best of luck next time

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