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Correction in RE in Pune

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Correction in RE in Pune

Last updated: May 10 2012
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  • Correction in RE in Pune

    Hello,

    I am new to the Real Estate Market. I am planning to buy new property for Investment purpose in Pune. Recenlty I heard that their may be some corrections possible in RE Market in coming months. It would be nice if any one is continously having a watch on RE Market can guide me whether the time is good to invest in RE or not?

    Your Honest advice is highly appreciated.

    Thanks
  • #2

    #2

    Re : Correction in RE in Pune

    Originally posted by HardikBhatt View Post
    Hello,

    I am new to the Real Estate Market. I am planning to buy new property for Investment purpose in Pune. Recenlty I heard that their may be some corrections possible in RE Market in coming months. It would be nice if any one is continously having a watch on RE Market can guide me whether the time is good to invest in RE or not?

    Your Honest advice is highly appreciated.

    Thanks
    I think the question is open ended. One can not be dependent far too much on factors outside ones control in taking such decisions.

    I would recommend following [you can call it unsolicited advice ]

    1> First understand legal/financial/structural aspects of RE.
    2> Understand the RE conditions in Pune.
    3> Understand how home purchase process works for an under construction house.
    4> Decide Your personal/professional/family related goals in deciding when/where to buy a home
    5> Talk to your friends/relatives
    6> and MOST IMPORTANT go though posts on this forum.

    HTH

    Comment

    • #3

      #3

      Re : Correction in RE in Pune

      Hello,

      But tht did not give away me the answer whether the time is good for the property to buy or not. As I can only looking out for property if the market is going good. If the RE market is going to fall down by 10-15% in next few months it would be better to wait.

      What do you say?

      Comment

      • #4

        #4

        Re : Correction in RE in Pune

        Originally posted by HardikBhatt View Post
        Hello,

        But tht did not give away me the answer whether the time is good for the property to buy or not. As I can only looking out for property if the market is going good. If the RE market is going to fall down by 10-15% in next few months it would be better to wait.

        What do you say?
        No one on this forum is a member of any RE regulator or a fortune teller my friend. You are asking a question which has been argued & debated a lot on this forum. Please go through other threads. You will find supporters of both the views.

        Comment

        • #5

          #5

          Re : Correction in RE in Pune

          Originally posted by HardikBhatt View Post
          Hello,

          But tht did not give away me the answer whether the time is good for the property to buy or not. As I can only looking out for property if the market is going good. If the RE market is going to fall down by 10-15% in next few months it would be better to wait.

          What do you say?
          Hi Hardik,

          Short and straight advise, which I believe in would be to wait for couple of months and watch the show. No matter where you go, small or big crook builders have jacked up the prices artificially. You start negotiating and they might reduce 25-50 bucks here and there..not much.

          I know one builder in balewadi, where my friend stays.. had major problem selling his flats in last 2 years because of the layout and vastu issues. In Jan his rate was 3000..sept it was 3400 and now he wants 4000. ..and the reason he gives is..when other builders are increasing, I will also do same. Such is the logic of these sadak chap chaps...

          A correction is due for sure, 10-15% is what being informed in some reports..in print as well as electronic media. It's a matter of your judgement...of the RE scene.

          My 2c..

          Comment

          • #6

            #6

            Re : Correction in RE in Pune

            Since last one year, I am reading on this forum like rate will be down during this diwali. .. correction with some percentage.. lab lab.
            I think all these are rumors. What I have observed that rate are increasing every months and area are being filled with buildings. What I have seen ,In 2009-10(beginning), rate were between 2500 -3000 ,now 3500-4000, if there is correction of 10-15% then rate will be 3200-3600.So what is the use of these corrections.Here I am talking about these rates for good area like baner,PS,viman nagar etc.During this, there will be less options for flat and area.

            Comment

            • #7

              #7

              Re : Correction in RE in Pune

              Originally posted by HardikBhatt View Post
              Hello,

              But tht did not give away me the answer whether the time is good for the property to buy or not. As I can only looking out for property if the market is going good. If the RE market is going to fall down by 10-15% in next few months it would be better to wait.

              What do you say?
              Most big builders have survived downturn of last 2 years without, well almost any hiccups. Smaller builders showed some correction. Pethkar Samrajya showed correction as much as 25-30 % if I know it correct .

              So answers is property prices variation depends upon location, builder, and times of course. I am not sure any generic statement can be made.

              Since you are a new entrant in this, I would also recommend studying economics of buying v/s renting. You may find that argument also very compelling, in which case you are insulated from property prices as such from the buying point of view.

              Wait if you can and enjoy.

              Comment

              • #8

                #8

                Re : Correction in RE in Pune

                Originally posted by HardikBhatt View Post
                Hello,

                But tht did not give away me the answer whether the time is good for the property to buy or not. As I can only looking out for property if the market is going good. If the RE market is going to fall down by 10-15% in next few months it would be better to wait.

                What do you say?
                i am trying to read between the lines a little bit... you are saying that you want to buy only if market is going good... which means one or more points below are true...

                1. You want a flat for investment and not staying yourself.
                2. You already have a place to stay but want a second home maybe because you want a bigger home or less commute or looking for a good location etc.
                3. OR you are renting someplace right now but there are no immediate issues and you can continue renting if the market is not good (by postponing the buying decision)

                If any one of this is true, here's my take.. again, this is unsolicited advice and these are my views only...

                1. If you have money and found a good place for personal use, fits in your budget by not over leveraging, EMI is around 30-40% of your net take home salary and you have secured monthly income to support your family needs (consider future needs also - old parents, kids, health etc) and decent lifestyle, the right time for buying is NOW. Go ahead and buy and enjoy your new home.

                2. If you need to purchase for self use but cannot afford right now or think that you are over leveraging, EMI is going 50% or more than your net monthly take home, then wait for few months. Save money by renting and make a bigger downpayment later while purchasing. with so many schemes going around right now and many of them under construction, you will surely find a place in the area you like.. if not new, but in resale. There will be always investors wanting to clear the inventory.

                3. If you are looking this from pure investing purpose, there are two scenarios

                a. You make 100% down-payment and take a ready possession property somewhere and then sell it quickly if you get a decent appreciation. In this case, there will be always a risk of correction of market and searching for a buyer for inflated rates can be an issue if you dont have enough holding power. Always remember, rent income will be peanuts compared to investment and there will be registration fees and capital gains taxes involved. So like any other market driven investment (Stocks/MF) this will be a risky one which can yield overall positive or negative results.

                b. You plan to take a loan for investing in a property which you would sell later. This is a strict NO NO. Considering the EMI and interest payments, your property appreciation and rental yield will always be negative. Put some numbers in a spreadsheet and you will realize this. The same is also explained on many threads on this forum.

                If you have any other scenario, mention it and we can give our views.

                Comment

                • #9

                  #9

                  Re : Correction in RE in Pune

                  Hello

                  I am as confused as any one , i too was planning to invest in hadapsar area but have shelved the idea for now,reason being the rates are erratic for sure - no doubt though they are on the rise since jan10 onwards there has been a rise of around 500-800 odd here and there depending on the project, so the time to reap the benefits are gone even if there is a correction as people are saying i.e. 10-15% the rate s would be what they were in sept-oct10.

                  I strongly feel it will be worse deep dip - home loans becoming dearer, news says Nov10 saw dip in RE sales,too many projects with ridiculous rates especially underconstruction -developers want rates what they might get when the distant areas develop in future say 5-6yrs from now today.

                  In hadapsar area you get a 2BHK from 54L-30L,area from main pune solapur Road{pearl tower} to handewadi{Dreams elegance},in this range you might get something in wakad with a better infrastucture and good area , less maddening traffic and it will give, i don't know if i may be wrong, better returns in the future. But still developer feels that they are rightfully charging the rates not to mention a burden of extra 4-5L(ST/VAT/Compulsary parking/maintainace advance/Soc Form. charges/MSEB SD/Reg/charging for dry balcony and some even 100% of terrace area)

                  Invest if you want to stay in the house{Strictly ready possesion} if it is an investment for capital growth or rental income take a risk , invest in FD's or MF for time being see how things turn and wait and watch.
                  I think one will get a appreciation of not more than a Lac in 1 year time if u want to resale ,look u have already pain some extra 4-5L in form of compulsary charges to the govt and the developer, and the buyer will not consider the same secondly any first time buyer would like to go for a new flat.If one is looking for an wating period of 5-8yrs do invest u will get fair returns . WAIT AND WATCH

                  Comment

                  • #10

                    #10

                    Re : Correction in RE in Pune

                    transcript of the interview with Pranay Vakil, Chairman at Knight Frank India

                    Vakil: Let us just go back a year – the volumes were healthy, the prices were healthy then the Greek factor came in and the prices went up by about 25-30%. What happened is that the volumes which were very healthy in the region of about 35,000 registrations every month started falling. Last month the numbers of registrations were only about 16000; it means that the volumes are exactly half of what they were one year back. It has happened mainly because the prices have gone up and we are seeing the resistance to pricing towards the end of 2010.

                    Talking of 2011, we are going to see a little bit of a different scenario because a lot of loans which were taken earlier are falling due for repayment around March. The developers are expecting this time around again these loans will be permitted to be rolled over the way they were done in the last two years because of recession. I don’t feel the RBI is in a mood to kind of allow that to happen. If the loans are not rolled over, the developers are going to be under pressure to liquidate their stock. When they liquidate their stock obviously there will be pressure on the prices particularly in the high value luxury segment, you are going to see some kind of a correction of between 15-20% come March of 2011.

                    Comment

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