Will RE see any correction in the coming months. Should people like us who are aggressively hunting right now wait for couple of months to see any correction happening in the PSF rates for the under construction property. In the last 2 months I have been following the rates of some specific areas and there is hype for some areas like panvel but for 2012 if any new construction comes up by reputed builder will we see any good deals coming up ??
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  • Correction has already started. What remains to be seen is 'how much'. Builders have huge inventory of unsold houses while buyers are waiting for further sharp decline in prices. RBI has ordered banks not to give any fresh loan to real estate builders because builders have already started default on earlier loans.

    The true worth of a house in any locality cannot be more than 100 months salary of an average resident. Beyond that is bubble. Besides when the rental yield is less than 4%, the prices are artificially higher. The current rental yield in top cities is even less than 1% after taking maintenance and house tax in account. So every body is playing the appreciation game. People are buying onions at 75 rupees/kg in the hope that it will go to 80 without realizing that the price is artificial in the first place.

    A bubble has a characteristic of remaining firm for quite some time without growing. Some bubbles in assets last upto 2-3 years, but what we must all understand correctly is that there is a huge bubble in property prices, and it is safe to exit and invest in any other asset class. If the money is white , a 10% RD in bank is perhaps the best and safest today.
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  • in mumbai do not expect prices to correct significantly. even if there is a fall the base rise yoy basis is always higher
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  • Ready Reckoner rates increased by 10 -30%

    This news is an additional burden to the buyer I think. Any thoughts on how this will affect the buyer?

    Stamp duty to increase by 30 %
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  • Another burden for middle class ppl who have all white money but not able to sustain sky rocketing prices in real estate. It will not make any difference to people who have black money and who are actually creating the hype and spoiling the market.
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  • Originally Posted by bruno11
    Another burden for middle class ppl who have all white money but not able to sustain sky rocketing prices in real estate. It will not make any difference to people who have black money and who are actually creating the hype and spoiling the market.



    Let's face it .. end customers are not the builders' target audience .. their target audience are the "investors" money bags .. investors are the folks who give them this tremendous leverage over the vast majority .. unless they get choked prices are not going down any time soon. The investors give them the much needed cash to cover their initial costs and hold the rest of us to a ransom.

    Even if you were to buy a kilo of tomatoes, the vegetable vendor will honor your request to either reduce the price by a bit or throw in an extra one .. builders even at 2 -3 Crs a flat are just refusing to budge .. how sad is that? A 3 bedroom co-op in Andheri is more expensive than a 3 bedroom HOUSE in New Jersey or London?? incredible I say.

    Builders will never reduce prices on their own, they will protect the interests of these investors as they give them the holding capacity. Investors on their part make merry and see their money double triple in value in no time at our cost by doing nothing. Everyone is happy but for us end users.

    The only way we can choke the system for air is by not allowing investors to cash out their investments. Else this system will take us down and enslave us to EMIs for the rest of our lives.
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  • The current macro economic scenario will not affect mumbai real-estate much. At most for the underconstruction projects the builder will sit tight and delay delivery. In most projects even if 40% units being sold start resulting in operating profits for the builders. So they can sit on inventory for a long time.

    Also, the governnment is supporting high prices by:
    a) not giving approvals to new projects
    b) increasing stampduty, no builder will sell below the ready reckoner rate ever! You will notice that the ready reckoner rates in mumbai are almost at par with market value, whereas in NCR they are barely 30%-40% of market value.
    c) delaying the RE bill and finally coming out with a diluted bill which wont apply to more than 20% projects due to large loopholes.

    The builders are doing quite well in mumbai .
    The black money pumped into real-estate easily gives the buyers an effective discount of 30%
    Also, dont forget the dreaded NRI dollars being pumped right now.. they already are sitting on a 20%-25% discount due to currency devaluation.

    Last 4 years have been listening about the recession and price crashing in Mumbai.. even 2009 came and went.. nothing so far.. very confusing for the end-users.. to continue on rent or buy at whichever place one can afford..

    PS: also, do not forget the Interest rate downswings coming in the next few months.. will result in ease of pressure on builder finances and more money being available for home loans... another trigger for sustaining current prices or another 5%-10% increase..
    Also, dont forget the dreaded NRI dollars being pumped right now.. they already are sitting on a 20%-25% discount due to currency devaluation.

    Last 4 years have been listening about the recession and price crashing in Mumbai.. even 2009 came and went.. nothing so far.. very confusing for the end-users.. to continue on rent or buy at whichever place one can afford..

    PS: also, do not forget the Interest rate downswings coming in the next few months.. will result in ease of pressure on builder finances and more money being available for home loans... another trigger for sustaining current prices or another 5%-10% increase..
    Also, dont forget the dreaded NRI dollars being pumped right now.. they already are sitting on a 20%-25% discount due to currency devaluation.

    Last 4 years have been listening about the recession and price crashing in Mumbai.. even 2009 came and went.. nothing so far.. very confusing for the end-users.. to continue on rent or buy at whichever place one can afford..

    PS: also, do not forget the Interest rate downswings coming in the next few months.. will result in ease of pressure on builder finances and more money being available for home loans... another trigger for sustaining current prices or another 5%-10% increase..
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  • rates corrected by 25%??

    I just received a mailer from groffr.com where they are marketing a property in Kalamboli (near Khargar, Navi Mumbai) at a 25% discount!! the property prices in that area are Rs4000-4500 psft and they are selling at Rs3400 psft.

    Biggest discount of the year!! Apartments in Roadpali @ Rs.3400/- psft. Hurry!!, Mumbai group deals, Sector 20, Roadpali, Navi Mumbai group deals

    When i called them, they told me that these are INVESTOR flats. As someone said in the thread that these were the same investors who were funding the real estate developers. Now when we see these investors exiting at 25% below market prices, it clearly shows that one major source of funding for developers is going to dry up soon.

    and from what i have heard a debt repayments are coming up for developers which will force them to sell their inventory at lower prices.
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  • These are just marketing gimmicks. The current market prices of ready apartments in the kalamboli area are Rs 3500 to Rs 4000.

    And the price mentioned as Rs3400 is just the BSP for probably an underconstruction property,

    Also, builders increase the super area of the flat by 15%-20% and then give a 10% discount on that!

    Also, builders increase the super area of the flat by 15%-20% and then give a 10% discount on that!
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  • Prices will remain high or stagnate at the current rates until the government can intervene to stop developers from raising prices based on speculation rather than on actual volume. This is almost makes real estate developers into carters that get people to pay higher prices with little to no value and mumbai is not alone in this (HK is the same but government intervention brought down prices) and also having a central agency that records all sales will really help but until corruption remains nothing will change prices will increase or stagnate a growth will be based on inflation rates atleast


    Basically a rip off !!
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  • Prices are somewhat stagnant currently but there are a variety of reasons why prices wont go down namely - builders having enough black money to fund them hence they can sit on inventory, builders-investors nexus which keeps prices artificially high, resale properties also become high when builders charge the moon for new properties. So there are enough reasons defying global economic norms which will not let prices go down. If an end-user, take the plunge now instead of waiting indefinitely. Else renting is not a bad option currently since rents are only about 2-2.5% of market value in most Mumbai suburbs.
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  • No hope then
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  • The real estate market will not break ... all these notions of 20% to 40% drop is GAS. All the BRIC ( Brazil , Russia , India and China) have wittnessed increase in rates in last 3~4 years . There might be some stagnation or little correction ( max 10% ) in the areas of where the houses are priced higher than a Crore , but there would not be any drop in prices for the property below a Cr ... infact it will increase ... Till next jan the following is anticipated

    a) Property price <30 Lacs ---20~25% increase
    b) Property price 30~50 Lacs --- 15~20% increase
    c) Property price 50~70 Lacs ---10~ 15% increase
    d) Propety price >70 Lacs to 1Cr ----5~10% increase

    Hence if you are an end user keep the above in mind and go ahead and buy or you will miss the bus . It is anticipated that RBI would reduce the rates after march ... hence there would be lots of demand ... due to low transactions in the past 5 months

    An investor could afford not to buy a house since for end user the qualitative benifits of owning a house is immense like the following

    a) Rent renwal is a head ache and the minimum is 10% now days
    b) Most land lord expect you to leave house after 3 years .. hence shifting is a challenge
    c) getting good house near a good school is a challange
    d) two income families are raising hence people have started owning the house in mid 20's rather than mid 30's earlier ... hence more demand
    e) the loading of flat is getting higher day by day .. earlier the loading was 20% .. in 90's .. in 2000's it was 30%... now the loading is between ....40 to 50% ... so even though the price remains same you are getting less area for the money spent ... hence earlier is better ... confirm this from any of your friends who have bought houses earlier ... how spacious they were.

    My personal experience if you like a house and you are an end user one should go ahead and buy it since the choices reduces after a period of time in terms of locality and the usable areas of the available flats. When you go to buy a flat of your choice its always that its more than what you have in mind (Budget)... ask anyone who as bought a house even you can ask your parents too. My parents concur with it

    But with Indian population increasing and demanding their OWN SPACE .. since it gives them an independent identity... according to planning commission in the 10th five year plan the shortage in urban housing is 2.5 Crores in 2007 . This would increase to 2.6 crores by 2012 as per eleventh five year plan (2007 to 12) estimates ... so how do you anticipate fall in prices and asset bubble... The prices are going to still increase futher with the land aquisition bill which make it mandatory to pay 5 times the rate of market price to the seller of land if they are acquired for development purpose . Like in case of Navi Mumbai the price of land for airport from farmers has now been calculated at Rs 5000 crs for 1000 acre of land rather than 1000 crs as per original plan...

    My suggestion is to all the end users to buy a house ... Ek Chat to milegi ... Kal ka kya pata

    Happy hunting....
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  • Most people invariably believe what they want to happen. There are 2 types of people in the forum, ones who have already bought, they keep on arguing that prices will keep on rising and other ones who haven't bought who feel prices will come down.
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  • Originally Posted by manugnair
    The real estate market will not break ... all these notions of 20% to 40% drop is GAS. All the BRIC ( Brazil , Russia , India and China) have wittnessed increase in rates in last 3~4 years . There might be some stagnation or little correction ( max 10% ) in the areas of where the houses are priced higher than a Crore , but there would not be any drop in prices for the property below a Cr ... infact it will increase ... Till next jan the following is anticipated

    a) Property price <30 Lacs ---20~25% increase
    b) Property price 30~50 Lacs --- 15~20% increase
    c) Property price 50~70 Lacs ---10~ 15% increase
    d) Propety price >70 Lacs to 1Cr ----5~10% increase

    Hence if you are an end user keep the above in mind and go ahead and buy or you will miss the bus . It is anticipated that RBI would reduce the rates after march ... hence there would be lots of demand ... due to low transactions in the past 5 months

    An investor could afford not to buy a house since for end user the qualitative benifits of owning a house is immense like the following

    a) Rent renwal is a head ache and the minimum is 10% now days
    b) Most land lord expect you to leave house after 3 years .. hence shifting is a challenge
    c) getting good house near a good school is a challange
    d) two income families are raising hence people have started owning the house in mid 20's rather than mid 30's earlier ... hence more demand
    e) the loading of flat is getting higher day by day .. earlier the loading was 20% .. in 90's .. in 2000's it was 30%... now the loading is between ....40 to 50% ... so even though the price remains same you are getting less area for the money spent ... hence earlier is better ... confirm this from any of your friends who have bought houses earlier ... how spacious they were.

    My personal experience if you like a house and you are an end user one should go ahead and buy it since the choices reduces after a period of time in terms of locality and the usable areas of the available flats. When you go to buy a flat of your choice its always that its more than what you have in mind (Budget)... ask anyone who as bought a house even you can ask your parents too. My parents concur with it

    But with Indian population increasing and demanding their OWN SPACE .. since it gives them an independent identity... according to planning commission in the 10th five year plan the shortage in urban housing is 2.5 Crores in 2007 . This would increase to 2.6 crores by 2012 as per eleventh five year plan (2007 to 12) estimates ... so how do you anticipate fall in prices and asset bubble... The prices are going to still increase futher with the land aquisition bill which make it mandatory to pay 5 times the rate of market price to the seller of land if they are acquired for development purpose . Like in case of Navi Mumbai the price of land for airport from farmers has now been calculated at Rs 5000 crs for 1000 acre of land rather than 1000 crs as per original plan...

    My suggestion is to all the end users to buy a house ... Ek Chat to milegi ... Kal ka kya pata

    Happy hunting....


    China is facing a property market meltdown currently where property prices have fallen about 20-30%.

    The correlation of interest rates (when rates are sub 13%) to real estate demand is not too much, in the past year the correlation has been spurious due to high real estate prices.

    The shortage in housing argument does not apply as there are 2 things need to buy and ability to buy , the market runs on enough people having the ability to buy at the given prices. To give you some statistics there were only about property 50,000 registrations in Mumbai in 2011, similar number in Thane.Where many of these would be re-sale. And there are about 2 lac new units unsold/vacant at various levels of construction in Mumbai, Thane as of today, which means there is 4 years of inventory.

    I feel there will be pressure on the UC rates in the near term with some discounts, not much. As ready possesion property is scarce we may not see a fall there.

    However in the long run (3-7 years) we will see a meltdown with prices falling by about 30-40%.

    Hence my suggestion would be, do not wait for the meltdown, buy a property for self use, but do not over leverage keep the loan in check at manageable level, that would hedge you against a price appreciation also, so that you are not out of the market at any point.

    Also do not buy properties in far flung areas, these will fall much more than the main areas as the speculation in these property is much higher.

    Disclaimer : I have booked a UC property in a Borivali redevelopment project at 8700/-psf, which I feel is high , but not too high compared to the 12000/- psf claimed at some properties , hence the fall , whenever it comes will be less steep
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