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Property Prices Down?

Last updated: January 20 2017
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  • Property Prices Down?

    Hi everyone , I am an end user who has a property in Malviya Nagar , Delhi and looking to purchase another property in the near future for self use . I have been trying to get hold of a good deal in Delhi , Noida in the hope of getting a flat / Builder floor at a 20 to 30% lower price than what was before demonetisation. I can tell you with 100% accuracy that property prices in Malviya Nagar , Delhi have not come down even by 10%. In my opinion the property prices in premium locations in Delhi are unlikely to come down substantially ( definitely not 20 to 30%) as predicted by some newspapers and property experts. Kindly put in your thoughts.......
  • #2

    #2

    Re : Property Prices Down?

    Nearly everyone who follows RE is certain rates will come down, visible in months to come. RE in India does not operate on fundamentals, but in bubbles. It is a sector heavily dependent on black money.

    Everyone is waiting & watching. Sellers who can, will wait a little longer - some may not see logic in selling at 70-80% price today. There is caution in the air to see how 'cash' component of sales may be adjusted after December 30. In any case, when there is such low transaction activity, there is little choice but to wait and see.

    Fact is new currency will take time to be in adequate circulation for 'hoarding'. There will always be fear of another move like Nov 8 which makes it risky for ordinary people to hoard cash like they did earlier. A new barrier has been broken with current demonitisation move - if it is repeated 1 year later, it could be done more easily & effectively as a repeat exercise. Rumours are abound that there may be other measures to curb black money.

    RE sentiments were already low. With increase in declared incomes & less cash being disposable, there being few commercial activities & transactions, and sentiments about the RERA & Benami Transaction Laws - there is no positive momentum in favour of the bubble continuing. A very small section of society can pay exorbitant 1 or 2+ crore in white. Plus, buyers are AWARE and demanding discounts - this in itself is a very big factor.

    Old rate included deals at 70:30 or 60:40 or so. For a 1 cr deal, will you want to accept 30 to 40L in cash? Does buyer have that in new notes? Assuming there are some people who still find a way around it - it will still be the exception & not the norm. The whole market will not find a way around it without getting caught.

    Taking example of a seller in Malviya Nagar you spoke of - seller can hope to sell property at old rates. But what if the 30 interested parties he meets refuse to buy at that rate?

    Prices are overdue for correction. Indian RE is an economical anomaly. It benefits only "traders" but not actual users of property. Here, end-users are better off renting!
    If you're looking to buy - wait a little longer.

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    • #3

      #3

      Re : Property Prices Down?

      Originally posted by pkdch0101 View Post
      Hi everyone , I am an end user who has a property in Malviya Nagar , Delhi and looking to purchase another property in the near future for self use . I have been trying to get hold of a good deal in Delhi , Noida in the hope of getting a flat / Builder floor at a 20 to 30% lower price than what was before demonetisation. I can tell you with 100% accuracy that property prices in Malviya Nagar , Delhi have not come down even by 10%. In my opinion the property prices in premium locations in Delhi are unlikely to come down substantially ( definitely not 20 to 30%) as predicted by some newspapers and property experts. Kindly put in your thoughts.......
      Wait a while, its not going to change overnight. There are enough idiots in the property market who would rather let their 1 Cr rot for 2 years than make a 90 lakhs deal today.

      Majority of buyers aren't sitting with 1-2 Cr in white so give it a few months and you'd be surprised with what the future holds for a buyer. When we know that the black component in Delhi property has always been on the higher side how many deals you think are happening right now? There's dearth of white money in property deals and all those who had "invested" in Delhi property would have to think beyond their emotions.

      Black money would take some time before its accumulated again. How many would be accumulating 50 lakhs or 1 Cr in another 6 months to buy a property? Not the majority for sure. So when the resale starts dipping, which it already has as per registry records, the demand and supply rule would start working in the buyer's favour.
      Buy Land, they're not making it any more.

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      • #4

        #4

        Re : Property Prices Down?

        30-50 lakh MIG segment will benefit most. Gone are the days of luxury projects. Housing for all looks possibility now.
        Last edited November 27 2016, 03:44 PM. Reason: clubbed post

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        • #5

          #5

          Re : Property Prices Down?

          Thank you fireheart , disposition , prince83 for your inputs. I think it makes a lot of sense not to buy a property immediately as this move of Demonetisation is very likely to be just a first step in a series of measures.I am sure Modiji will follow this with further announcements to curb black money. Only time will tell how demonetisation and the subsequent steps that the government will take in the future impact property prices. I still think on a personal level that the prices are unlikely to come down crashing atleast in Delhi due to the limited inventory particularly in the 2 BHK segment.

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          • #6

            #6

            Re : Property Prices Down?

            Originally posted by fireheart View Post

            Wait a while, its not going to change overnight. There are enough idiots in the property market who would rather let their 1 Cr rot for 2 years than make a 90 lakhs deal today.

            Majority of buyers aren't sitting with 1-2 Cr in white so give it a few months and you'd be surprised with what the future holds for a buyer. When we know that the black component in Delhi property has always been on the higher side how many deals you think are happening right now? There's dearth of white money in property deals and all those who had "invested" in Delhi property would have to think beyond their emotions.

            Black money would take some time before its accumulated again. How many would be accumulating 50 lakhs or 1 Cr in another 6 months to buy a property? Not the majority for sure. So when the resale starts dipping, which it already has as per registry records, the demand and supply rule would start working in the buyer's favour.
            You were in the market for buying a property right? Did you finalize anything or postponed it for now?

            Comment

            • #7

              #7

              Re : Property Prices Down?

              Originally posted by aashish2137 View Post

              You were in the market for buying a property right? Did you finalize anything or postponed it for now?
              Had to postpone because of logistical issues that everybody else is facing as well. I'm just glad that I wasn't in the middle of the deal. Hopefully I can save another 5-10 lakhs now
              Buy Land, they're not making it any more.

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              • #8

                #8

                Re : Property Prices Down?

                Originally posted by fireheart View Post

                Hopefully I can save another 5-10 lakhs now
                Wait for another 17 months and this figure will be much higher!!!
                Now everyone knows that Modi's next target is Real Estate but no one knows what is his plan and when
                he will disclose it like 08th Nov 08 pm then many will get big surprise and there are chances that
                many benami properties will become like old 500/1000 notes.

                Cheers!!!

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                • #9

                  #9

                  Re : Property Prices Down?

                  for people expecting DRASTIC correction
                  1. Approximate per sq. ft. construction cost for a high rise with MIG finishing ? 2000 per sq ft

                  2. cost of land at decent location ? 60k per sq yard or 6k per sq ft

                  3. Allowed FAR = 3

                  Total cost per sq ft = 2000 + 6000 / 3
                  = 4000 per sq ft

                  4. Miscellaneous costs
                  Builder should maintain employees, office, etc. adds to the overall cost.

                  5. Interest to be paid on loan taken by developers is another addition to cost.

                  Project is not profitable / executable if sold below 6k per sq ft. during launch and steadily increasing the price thereafter as per construction progrrss.
                  Doing reality business is too much headache and probably i have added minimum cost and minimum profit margin.

                  For end user its actuall 6k plus govt. taxes @11% and some other charges taking the total cost to 6.6k to 7k.

                  Anyone expecting DRASTIC reduction !! Should debate which head of cost will see reduction for end user.

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                  • #10

                    #10

                    Re : Property Prices Down?

                    Originally posted by TalkStraight
                    for people expecting DRASTIC correction
                    1. Approximate per sq. ft. construction cost for a high rise with MIG finishing ? 2000 per sq ft

                    2. cost of land at decent location ? 60k per sq yard or 6k per sq ft

                    3. Allowed FAR = 3

                    Total cost per sq ft = 2000 + 6000 / 3
                    = 4000 per sq ft

                    4. Miscellaneous costs
                    Builder should maintain employees, office, etc. adds to the overall cost.

                    5. Interest to be paid on loan taken by developers is another addition to cost.

                    Project is not profitable / executable if sold below 6k per sq ft. during launch and steadily increasing the price thereafter as per construction progrrss.
                    Doing reality business is too much headache and probably i have added minimum cost and minimum profit margin.

                    For end user its actuall 6k plus govt. taxes @11% and some other charges taking the total cost to 6.6k to 7k.

                    Anyone expecting DRASTIC reduction !! Should debate which head of cost will see reduction for end user.
                    Land prices art obviously most highly inflated. We are talking about Noida, not Manhattan. There is also a difference between retail price of land and the bulk rate for a housing project. In any case, retail land prices in Jaypee Wishtown are down to 40-50 k and there are still no takers.
                    2k for construction on 50% loading means 4k for actual square footage. Which builder spends even half of that on MIG kabootarkhanas sold in Noida ?

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