Hello,

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

http://www.moneylife.in/article/81/5809.html
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  • Originally Posted by sameerk26
    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
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  • 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...
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  • 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.
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  • Originally Posted by rajeshmr229
    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.
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  • 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..
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  • 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.
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  • 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.
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  • not making any sense

    Originally Posted by wadia
    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 .. ..
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  • You don't see a recession in the next 5 years?!!

    Originally Posted by wadia
    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!!!:D

    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
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  • Originally Posted by wiseman
    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!!!:D

    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


    I agree. Could you tell me what it is that I can do in my own way to avoid it? :)
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  • Consider America to be a human. In that case it is not over-leveraged. And then there is china to lend to America.
    If America borrows to boost its growth, it is no problem as long as it is able to pat its EMI.

    As regards Europe, they do not have enough people to lend them as they do not work hard enough. If they live beyond their means then they will have to bear the cost. Germany France and UK are the growth engines of Europe and they will maintain the Europe growth at 1-2%. The countries are also not over-leveraged so they do not have much to fear.

    All indicators I see say that there is no recession coming in next 3-5 years.

    America may grow at 2% instead of 4%, Europe may grow at 0-1% instead of 2%, Japan will remain stuck at 0%, but India & China will continue to grow at a healthy 6-8%. So where is the possibility of a recession?

    When Dow raged from 6.5K to 11K, you did not say anything. Now that it falls from 11K to 10K you look very worried??
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  • We are not into Recession phase... This is called as "Recovery" in economy cycle.

    After such a tough and deep recession, It will almost take 4-5 yrs to be in Recovery and later Growth cycle will come back.

    Now, how does it impact India?

    Well, It won't. India was never in Recession and won't be for at least next decade. Our growth is sustainable based on in house expertise and not on service industry. A large consumer market with more than bn ppl, is not going to be in Recession, it's impossible.

    An economy growing at rate of 7-8%.. might surge down to 6%. But still 6% growth is way better than other developed economy.
    So all in all , we are in better situation.

    ----------------------------------------------------------
    RE buying pattern - Mumbai RE bubble is not going to burst in sooner or later time frame.

    End-User: There is no need to wait for correction or bubble burst. Customers always choose best property at current market rate. That's it. You need a home to stay, and have to buy at cmp.
    If you wait, you might have to pay more..!!

    Investor: Buying strategy is way too different than normal buyer. Investors look for opportunity and it is time bound. Timing is very important. Investors hold cash if there is no right market to invest.
    They wait for in search of better opportunity.

    FYI... Mumbai is no more Investors first choice. Not in NRIs or Locals.
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  • I agree with sweetunaiya.
    Investors first choice is hyderabad, greater noida, chennai or even pune.
    Much of the properties bought in Mumbai are by people who wish to hold them for 10+ years.
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  • V good article

    thanks for the post bud. confirms my doubts about the market and confirms that times of india is pimping for the developers.

    Originally Posted by sameerk26
    Hello,

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

    http://www.moneylife.in/article/81/5809.html
    CommentQuote
  • One more thing I would like to highlight is "flip-flop" RE culture. I read so many comments in this forum, about ppl buying and selling property in short period of time.

    This is not common in India and even Investors don't do it frequently. Investors want maximum return on their investment and flip flop is not a good solution.

    Builders specially in Mumbai is trying to gain extra money and create false demand which any person can understand. It's upto you to do not trap into this.

    Places like navi mumbai, kalyan, thane might see correction because there is huge inventory collection, invesotrs holding & comparatively less buyer. But Mumbai, south and suburbs actually facing higher demand hence forth prices r up.
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