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Will Property Prices Fall In Mumbai?

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Will Property Prices Fall In Mumbai?

Last updated: June 9 2010
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  • Will Property Prices Fall In Mumbai?

    Hello,

    Just wanted to share this nice article which forecast the RE trends

    http://www.moneylife.in/article/81/5809.html
  • #2

    #2

    Re : Will Property Prices Fall In Mumbai?

    Originally posted by sameerk26 View Post
    Hello,

    Just wanted to share this nice article which forecast the RE trends

    http://www.moneylife.in/article/81/5809.html
    Thanks for sharing.

    VK

    Comment

    • #3

      #3

      Re : Will Property Prices Fall In Mumbai?

      Yes current prices are obnoxious and will correct..
      But all this will result in slowing down of projects.. and people invested will have to bear the brunt of that...

      Comment

      • #4

        #4

        Re : Will Property Prices Fall In Mumbai?

        Even if there is a correction of prices between 15-20% still there will be a surge in demand because there are many potential buyers who are waiting for this to happen. This again will lead to price increase which the builder lobby will take advantage of.Me and Many of my close friends have also postponed the plan to buy a house at current prices.

        Comment

        • #5

          #5

          Re : Will Property Prices Fall In Mumbai?

          Originally posted by rajeshmr229 View Post
          Even if there is a correction of prices between 15-20% still there will be a surge in demand because there are many potential buyers who are waiting for this to happen. This again will lead to price increase which the builder lobby will take advantage of.Me and Many of my close friends have also postponed the plan to buy a house at current prices.
          Correction will need a stimulus.
          In 2008-09 the stimulus was: Stock Market Crash, Recession, Builder loan obligations.

          I do not see a recession again in next 3-5 years. Most builders with their current books can withstand 1 year of loan repayments, Stock market is it at right level.

          Only thing that can cause correction then is oversupply. There is too much supply coming in but the demand also is huge. So do not expect more than 5% correction. Prices may remain stable or rise 5-10% in next 1 year.

          So if the odds are:
          5% correction 30%
          5-10% rise 20%
          No change for 1 year 50%
          Then if you are an end user, don't delay.
          If you are an investor you are in the wrong market unless your return time window is 10-15 years.


          Difference between investor and end user:
          It is only investors who try to time the market.
          If you are an end user, timing the market is not so sensible as there is 50% chance that you will lose the boat.

          If the investor loses the boat he will not invest and will hold cash. He loses the chance to make profit which is no big deal.

          If you lose the boat you have to shelve more money (which sometimes you cannot afford). And you are burning cash by paying rent and you want to have your own flat, so you should me more averse to risk.

          Most people mix their investor khujli with their need for home. This is not necessarily a good idea. I have seen many case swhere people missed their boat. People who had 1C (in 2004) and wanted to buy a 2BHK in Colaba, buying a 3BHK (2007) in Borivali.
          Last edited June 4 2010, 04:31 PM.

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          • #6

            #6

            Re : Will Property Prices Fall In Mumbai?

            See if people have the capacity they will buy.. but people who do not and are not willing to buy in Dombivili and Kalyan because that is what thay can afford will hold on and wait for correcton.. Nothing wrong in that..

            Comment

            • #7

              #7

              Re : Will Property Prices Fall In Mumbai?

              I agree.
              People who do not have money and have pinned their hopes on correction are right in their own way.
              People who have money but do not want to live in Kalyan and Dombivali are again right in their own way.

              But people who have the money and can buy in the location they want to, but are playing timing game have the risk that they will be priced out.

              Comment

              • #8

                #8

                Re : Will Property Prices Fall In Mumbai?

                The need is having significant rental housing without fear of losing your flat due to silly renter friendly laws. It makes sense to rent for so many people, yet they are forced to buy or live with family.

                Ofcourse, everyone expects someone else to do this and nothing gets done, while the builders and politicians get the benefits. Patricipate in democracy or you have no right to complain. Don't expect to write a letter and have things magically change. Here in the US, it takes years before a public policy change is implemented, even if there are significant vested interests against the policy.

                Comment

                • #9

                  #9

                  Re : Will Property Prices Fall In Mumbai?

                  not making any sense

                  Originally posted by wadia View Post
                  I agree.
                  People who do not have money and have pinned their hopes on correction are right in their own way.
                  People who have money but do not want to live in Kalyan and Dombivali are again right in their own way.

                  But people who have the money and can buy in the location they want to, but are playing timing game have the risk that they will be priced out.
                  people who have money should buy a house if it is end user ..
                  they have to come up with at least 40 lacs in cash to go for a decent house
                  and most of the houses are costing 1 cr .. and banks are not ready to give 60 lacs as loan .. even though combined income with both husband and wife earning is 1 lac a month .. i wouldnt put all my money in paying the installment of my house . cause there are basic needs which would take atleast 10 to 12 k a month that is if all the family is frugal if you throw a kid in the equation then you are easily looking at another 6 k .. so

                  monthly income 100000
                  monthy kharcha 20,000 ( very conservative)
                  so out of the 80 k remaining if 70 k goes as an installment i for one would be very uncomfortable .. ..

                  Comment

                  • #10

                    #10

                    Re : Will Property Prices Fall In Mumbai?

                    You don't see a recession in the next 5 years?!!

                    Originally posted by wadia View Post
                    Correction will need a stimulus.
                    In 2008-09 the stimulus was: Stock Market Crash, Recession, Builder loan obligations.

                    I do not see a recession again in next 3-5 years. Most builders with their current books can withstand 1 year of loan repayments, Stock market is it at right level.

                    Only thing that can cause correction then is oversupply. There is too much supply coming in but the demand also is huge. So do not expect more than 5% correction. Prices may remain stable or rise 5-10% in next 1 year.

                    So if the odds are:
                    5% correction 30%
                    5-10% rise 20%
                    No change for 1 year 50%
                    Then if you are an end user, don't delay.
                    If you are an investor you are in the wrong market unless your return time window is 10-15 years.


                    Difference between investor and end user:
                    It is only investors who try to time the market.
                    If you are an end user, timing the market is not so sensible as there is 50% chance that you will lose the boat.

                    If the investor loses the boat he will not invest and will hold cash. He loses the chance to make profit which is no big deal.

                    If you lose the boat you have to shelve more money (which sometimes you cannot afford). And you are burning cash by paying rent and you want to have your own flat, so you should me more averse to risk.

                    Most people mix their investor khujli with their need for home. This is not necessarily a good idea. I have seen many case swhere people missed their boat. People who had 1C (in 2004) and wanted to buy a 2BHK in Colaba, buying a 3BHK (2007) in Borivali.

                    Wadia,

                    Your logic in all the rest of your post is correct. But what basis are you using to predict that there will be no recession in the next 5 years?! Since the rest of your logic is based on this crucial premise, if this is wrong, then everything else will fail, right?

                    I think you may be right after all. We will, instead of a having a recession, probably have a depression which will be much worse!!!

                    As I post this, the DOW (also the S&P) is making a critical move which may take it down in a sharp move. With the "disappointing" jobs repot today, its once again taking a dive.

                    With Europe in deep doo-doo, US technically insolvent (they just announced yesterday that they had crossed $13 trillion in debt, 90% of GDP nd they are on track to cross GDP early next year itself) and Japan already a failed state and China's RE market freezing, etc, etc how can you be serious in predicting no recession in the next 5 years?

                    In fact the next 5 years will be the worst period, starting anytime now but not later than the 2nd half of this year! Beware!

                    cheers
                    Last edited June 4 2010, 07:53 PM.

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