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Real Estate index says prices correcting???!!!

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Real Estate index says prices correcting???!!!

Last updated: July 31 2010
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  • Real Estate index says prices correcting???!!!

    Guys,

    I just saw this info from ]http://nhb.org.in/Residex/CHENNAIres.php[/URL]. This says that overall the prices seem to be coming down.

    Want to see this forum's response to this. I know natraj,wiseman and others will provide good points :-)

    Regards,
    lsjey
  • #2

    #2

    Re : Real Estate index says prices correcting???!!!

    Attention Nats!

    Nats ,

    Did you see this index ? I am expectoing your valuable(?) comments?

    Ragards,

    Nattu Dasan

    Comment

    • #3

      #3

      Re : Real Estate index says prices correcting???!!!

      Chennai prices

      Dear friends,

      In view of less demand for flats and more flats ready/under construction, the prices are down by atleast 20% within city areas and much more in outskirts even in the range of 25 to 35 % dpending on the area and location of the project. The rent rule at Rs. 8000 to 10000 for a 2 bed about 750 sq. ft. ,Rs. 10000 for 850 to 1000 sq. ft. in Saidapet. In Tambaram better located areas nearer to Rly. Stn. and main road, the rent also rule at the above indicated levels at Saidapet.

      ks2071746

      Comment

      • #4

        #4

        Re : Real Estate index says prices correcting???!!!

        Originally posted by venkit View Post
        Nats ,

        Did you see this index ? I am expectoing your valuable(?) comments?

        Ragards,

        Nattu Dasan
        I dont need a Venkitu mada bear as a dasan! LOL!

        Comment

        • #5

          #5

          Re : Real Estate index says prices correcting???!!!

          Guys,

          Jokes apart... What do you guys think is the reason behind this drop...

          I feel confounded by this:

          1. RE developers are acting cagey and not lowering prices by as much as this index says it has dropped.
          2. Rental is not coming down for middle class kinda houses.

          So what are these index boys tracking???

          Regards,
          lsjey

          Comment

          • #6

            #6

            Re : Real Estate index says prices correcting???!!!

            Originally posted by ks2071746 View Post
            Dear friends,

            In view of less demand for flats and more flats ready/under construction, the prices are down by atleast 20% within city areas and much more in outskirts even in the range of 25 to 35 % dpending on the area and location of the project. The rent rule at Rs. 8000 to 10000 for a 2 bed about 750 sq. ft. ,Rs. 10000 for 850 to 1000 sq. ft. in Saidapet. In Tambaram better located areas nearer to Rly. Stn. and main road, the rent also rule at the above indicated levels at Saidapet.

            ks2071746
            Hi ks
            can you give me a comparision of rates in east tambaram(your forte) to validate the crash of 35% . as you have been saying the current rates are 3000-3500 now, so a 35% drop means they were selling at 4600 to 5300 at peak.go ahead and give me any other locality in the outskirts where this has happened.pls discount areas far away.
            the fact is the peak rates at E tambaram were 3000-3500 where is the 35%correction

            Comment

            • #7

              #7

              Re : Real Estate index says prices correcting???!!!

              Originally posted by lsjey View Post
              Guys,

              Jokes apart... What do you guys think is the reason behind this drop...

              I feel confounded by this:

              1. RE developers are acting cagey and not lowering prices by as much as this index says it has dropped.
              2. Rental is not coming down for middle class kinda houses.

              So what are these index boys tracking???

              Regards,
              lsjey


              This is what they claim on how they are tracking
              • Prices have been studied for various administrative zones/property tax zones constituting each city.
              • The index has been constructed using the weighted average methodology with Price Relative Method (Modified Laspeyre’s approach).
              • Primary data on housing prices is being collected from real estate agents by commissioning the services of private consultancy/research organisatons of national repute; in addition data on housing prices is also being collected from the housing finance companies and bank, which is based on housing loans contracted by these institutions.
              I dont believe that the index captures the data accurately and should be expected to reflect the market scenario.There will be lots of inconsistencies owing to the unregulated nature of RE market.

              Neverthless, the index is a good start to know the trend.

              If you really want to use the index to arrive at the market price.Try the following.

              We have the guideline value that was last updated in 2007 which is the same as the base year of the NHBResidex.

              From my observation, Generally the market price has been (FSI allowed)*(guideline value)

              so if you want to calculate for Velacheri

              The guideline value will range from 1500/sqft-2500/sqft for residential areas depending on the location.

              guideline value - 2500/sqft
              market value - (1.5)*2500 = 3750/sqft = 90L/grnd in 2007

              adjusting for inflation and returns from RE and assuming it as 20% p.a. = current price = 1.30C/grnd

              NHBResidex for velacheri - year 2007 = 100 year 2009 = 77

              Please note, NHBResidex is adjusted to inflation

              so calculating directly, market value as per NHBResidex
              = (77/100*1.30C) = 1C/grnd

              Comments are welcome.

              Comment

              • #8

                #8

                Re : Real Estate index says prices correcting???!!!

                In summary as you rightly said, the unregulated RE market does not have any means for an index. It is just a beginning and given the diversity of India I think it will be a joke forever.

                Comment

                • #9

                  #9

                  Re : Real Estate index says prices correcting???!!!

                  http://www.nhb.org.in/Residex/Data&Graphs.php

                  I think this is a good link, and we would have more information once we have data for 2010.

                  In Pune, prices have increased from 100 to 117 in three years - it doesnt even cover the inflation, forget the interest rates...

                  Infact, I was checking magic bricks - the same 1500 sq feet apt at Bhandarkar Road was available in 2007 at 8000 Rs per sq feet, the price available is SAME there now.

                  LUCKY ME !

                  Comment

                  • #10

                    #10

                    Re : Real Estate index says prices correcting???!!!

                    Yes you are right, untill a property beats the intrest rates or inflation parameters, the property is actually loosing its value. We must remember the time value also while evaluating the increase in property prices. Infact except Mumbai and GGN most of the regions in India has posted negative returns . Iam not considering speculative areas like Yamuna expressway. etc.
                    Digvijay

                    Comment

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