Prices doubled from 2009...enough said....
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  • Is this going to be Part-2 of the great epic?
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  • Originally Posted by stoxxx
    Prices doubled from 2009...enough said....

    Lol:D. What is enough said?? Can you show me the price comparisons ??

    Nanded City should have been 5000-5500/sq ft now (2500-2700 in 2009),
    Samrajya should have been 8000-8400/sq ft (4000-4200 in 2009).......

    And there are many other egs. too.
    Btw, this is a forum & not twitter :D....please explain while starting new thread.
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  • So as per theory prices are going to increase 50% on YOY basis??
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  • Nice & catchy title!

    Originally Posted by stoxxx
    Prices doubled from 2009...enough said....


    Stoxxx,

    Good start!

    Now let us get to the nitty gritty with an unbiased view ...

    Coming to the the term "proved right". What was the prediction / prognosis? What is the data that proves it right?

    For example ... if price in a location (please take a popular developed location & not some farmland which went up from Rs 1 to 2).

    Show 2009 & 2011 prices. If you can, also show a price adjusted against
    1. inflation
    2. Gold

    Show that target was reached!!!

    As far as I can see, if target of builders was reached, one important, indirect indicator should have exceeded 2007 levels. Stock prices of listed builders.

    Reason I'm invoking stock price is that it incorporates overall health of builder, including how much they are holding back as inventory (by borrowings & without selling) in order to keep prices artificially high. Otherwise, think of hit on prices if all that inventory came immediately to market at wharever price it could afford.

    Here is that indicator...

    Company, 2007 high, 2009 low, current
    ------------------------------------------------
    DLF ....... 1300 ......... 170 ....... 225
    Unitech .. 580 ........... 22 ........ 33
    Sobha ... 1230 .......... 150 ...... 250
    ------------------------------------------------

    You get the picture. If these were really doing well & selling all that they built at healthy prices (& not kept piling up inventory to hide the fact that the real market was actually weaker & could not support such volumes at such high prices), then their stock prices would reflect the health & good future prospects & be at new highs!!!!

    When we see that prices have really gone up on increasing volumes & low supply, then we have a genuine story. Otherwise its like the bailouts have kept various economies in "growth" mode!

    cheers
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  • Pls show data ?
    v few places/areas have prices doubled. Most of the places it is arnd 20 to 50%

    only doubling example in mumbai is DB Realty in dahisar reached a low of 3200 in march 2009. it is somewhere around 6K now. Any other can you point out where it has been 100%. ?

    Originally Posted by stoxxx
    Prices doubled from 2009...enough said....
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  • Classic case of HIT and RUN

    Originally Posted by stoxxx
    Prices doubled from 2009...enough said....


    This person personifies classic hit and run , what that means is , he/she will start a contriversal topic and then never bother to respond , because it has done its job of creating that curosity and look at the # of views this topic has .. people want " san sani khabar" weather it makes sense or not .. nobody cares
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  • Originally Posted by shashankgujjar
    This person personifies classic hit and run , what that means is , he/she will start a contriversal topic and then never bother to respond , because it has done its job of creating that curosity and look at the # of views this topic has .. people want " san sani khabar" weather it makes sense or not .. nobody cares


    oh yeah...and how many threads has this person started....firstly look at my responses in other thread and where I have already suggested by examples why the thread title 'RE bulls theory proved wrong' is inappropriate.....

    I know on this forum most people having missed the bus and waiting for downward prices forever in vain would attack any other view that suggests that prices have actually been moving north since 2009 when the other thread was started.
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  • let me clarify the term doubling was more a metaphor but in reality it implies a significant rise be it 40% or 60%.
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  • Originally Posted by wiseman
    Stoxxx,

    Good start!

    Now let us get to the nitty gritty with an unbiased view ...

    Coming to the the term "proved right". What was the prediction / prognosis? What is the data that proves it right?

    For example ... if price in a location (please take a popular developed location & not some farmland which went up from Rs 1 to 2).

    Show 2009 & 2011 prices. If you can, also show a price adjusted against
    1. inflation
    2. Gold

    Show that target was reached!!!

    As far as I can see, if target of builders was reached, one important, indirect indicator should have exceeded 2007 levels. Stock prices of listed builders.

    Reason I'm invoking stock price is that it incorporates overall health of builder, including how much they are holding back as inventory (by borrowings & without selling) in order to keep prices artificially high. Otherwise, think of hit on prices if all that inventory came immediately to market at wharever price it could afford.

    Here is that indicator...

    Company, 2007 high, 2009 low, current
    ------------------------------------------------
    DLF ....... 1300 ......... 170 ....... 225
    Unitech .. 580 ........... 22 ........ 33
    Sobha ... 1230 .......... 150 ...... 250
    ------------------------------------------------

    You get the picture. If these were really doing well & selling all that they built at healthy prices (& not kept piling up inventory to hide the fact that the real market was actually weaker & could not support such volumes at such high prices), then their stock prices would reflect the health & good future prospects & be at new highs!!!!

    When we see that prices have really gone up on increasing volumes & low supply, then we have a genuine story. Otherwise its like the bailouts have kept various economies in "growth" mode!

    cheers


    Good post as usual....will get back time permitting have been traveling extensively hence first post was cryptic....
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  • Originally Posted by stoxxx

    I know on this forum most people having missed the bus and waiting for downward prices forever in vain would attack any other view that suggests that prices have actually been moving north since 2009 when the other thread was started.


    Yes. This is exactly what I thought reading at some initial responses to the thread.
    Now we have two threads discussing two opposite views. :bab (22):
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  • Good news!!! Today's Bangalore TOI carries an article that correction in RE is inevitable. Though we at IREF already knew that. :bab (6):

    When the TOI-let newspaper that always reports about fake price rises, now starts reporting that there is possibility of correction, you can guess where the RE market is headed in next few months. All along they were hoping to cosy up the builder lobby, now when the builder lobby is castigating them for not doing enough, they start reporting such news articles.
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  • India is a structural bull market for both stocks and RE for next 50 years.

    Every bull market gets cyclical corrections of 30-50% also - and currently we are going through one such.

    They are buying opportunities. RE is a more smooth but relentless rise than stocks and so will give you great returns without crazy volatility

    Something I posted a some 1 1/2 or 2 years ago on RE bulls thread: Reading it again, I find not much has changed - (reproduced below)


    Some RE, including at least the roof over your own head, is a total must to guard against inflation.

    There are 3 causes of inflation. First, the most basic is supply demand mismatch. If a thing is scarce, it costs more and as scarcity continues, price keeps rising. Scarcity can be genuine or because of hoarding/black marketing.

    Second is monetary policy - an increase in money supply.

    Third is competitive disadvantage - which is what results in currency devaluation.

    As regards RE, increase in price of RE is in fact nothing but inflation. It affects everybody including you and me. RE price inflation has been traditional in India because of scarcity factor due to misgovernance reasons.

    There is 700 million acres of land in India, around 1 acre for every 2 people. Around 250 million acres of this is cultivable.

    People cannot build homes in this land because there are no roads - you need a helicopter (or walk/bullock cart as actually practiced) to reach 90% of this land.

    Cost of land in countryside reflects acricultural output. Average is 50,000 per acre (price of 1 laptop). Highest possible yield of agriculture, as practiced in India is 2 tons of cereal per acre = 40,000 Rs at 20 Rs per kilo. Not counting input costs. Usual agricultural yield without irrigation is around 10,000 Rs per acre. Which is peanuts. So the value of land is determined entirely by means of roads - if there is road, price is in crores. If there is no road, price is in peanuts.

    Second we have bad laws. There are laws in every state which restrict building on agricutural land. There are urban land cieling acts which prevent easy manufacturing of large scale apartments. Tenancy laws are tilted against landlords, who prefer to lock up the flat than rent it (more in Delhi). All of these create a scarcity of housing, which has the effect of making housing expensive.

    Tenency laws paradoxically prevent people from getting cheap rental houses. Otherwise massive tenaments can be erected by companies and rent out 1000 sf flats at 1000 Rs per month (thats all it actually costs). But our govt is wretched and perverse and prevents this from happening by keeping archaic tenancy laws. As a result, people pay the same 1000Rs rent for living in a slum in Dharavi. Actually much more.

    Govt gains in multiple ways from this scarcity. Politicians finance and are financed by crooked builders. High value RE is a good hiding place for black money as well as corruption money. Congress traditionally has juggi jhopri vote bank - so they try to keep people poor. Their modus operandi is - you have to vote for me otherwise you lose even your juggi!!!!! Nobody publicises the fact that Congress laws are what created the juggi in the first place.

    In any case, after 60 years of mismanagement, the scarcity of flats remains. At the pace in which govt is creating roads, there is going to be flat scarcity for my lifetime at least.

    But my fear for the near future is that multiple factors are converging to cause inflation all together.

    First, the RE scarcity has been magnified by recent prosperity - salaries are up and a lot of people are looking to buy. People in their 50s, 40s, 30s, and even 20s are all entering the RE market at the same time. Last time this happened in 2004-2007, we had RE hyperinflation. Flat prices tripled in 3 years. As long as our economy does well, this trend will continue.

    Second, there has been good monetary action by RBI but exceptionally incompetent fiscal policy by the finance ministry. This includes NREGA, 6th pay commission and loan waivers. We have overspent govt funds crazily and this has caused an increase in money supply which makes inflation inevitable. This will be reflected in RE price. The govt servants and puclic sector undertakings have all got salary rise and arrears which will inevitably go to RE. It will also stoke inflation of food - where also poor govt policy has caused scarcity by destroying agriculture (17% of GDP last I heard).

    Third, monetary policy of the whole world is loose and over 5 years is bound to increase raw material prices for oil and base metals, both will impact RE constructin cost.

    Finally, currency movements in both directions will cause RE price inflation. If Rupee strengthens, then it means our economy is doing well and there will be more people quieing up for flats. If Rupee weakens, raw material costs will go up making flats more expensive to build. At the same time s o f t w a r e outsourcers will get a competitive advantage and will see pay rises - increasing demand for RE.

    There is one other thing - which many people who talk demand and supply do not understand at all.

    In USA there are 18 million more dwelling units than there are households. 18 million vacant homes. But year on year the number of households is increasing because of immigration and more children by christian rightwingers.

    In Europe, number of dwelling units equals number of households, with a mild excess which varies from country to country. There is a decline in number of households year on year due to declining population.

    In Japan, number of dwelling units equals number of households. But number of households is dropping precipitously due to massive aging and population decline.

    In China, number of dwelling units which in India will be called "pucca" exeeds number of households (YES!!!!!!). Everybody has a home, a TV, a cycle, a washing machine. Most current dwelling units are more than adequate by Indian standards. New housing is aspiratinal i.e. a luxury, as people earn more and want to better their lifestyle. Population is plateauing and is likely to face a 50 year slow decline followed by a precipitous drop much worse than Japan.

    Now you all know what India is. The vaaaaaaaaaaast majority live in tents/juggi/footpath/village huts without electricity.

    A small percentage of this mass moves out of poverty every year. This will create a demand supply mismatch for the next 100 years.

    If India shows even 5% growth sustained for the next 20 years, there will probably be a 50% mismatch over this period i.e. there will be only half as many dwelling units as compared to households with income enough to buy/rent a flat.Shortages and RE price inflation is inevitable.

    Better buy now. RE price has only one way to go and that is up.

    Current flattening is a buying opportunity, before the relentless RE inflation continues. I do not anticipate good road building by Indian governments for at least 15 years. The only thing which can prevent RE inflation is road building. If govt builds roads, then it will dull the RE price inflation somewhat.

    Since political parties are the main beneficiaries of RE price inflation, including election funding, it is in their self interest to misgovern India.
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  • Agree completely with the above post. Well said....
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  • Am i glad i missed the bus

    Originally Posted by stoxxx
    oh yeah...and how many threads has this person started....firstly look at my responses in other thread and where I have already suggested by examples why the thread title 'RE bulls theory proved wrong' is inappropriate.....

    I know on this forum most people having missed the bus and waiting for downward prices forever in vain would attack any other view that suggests that prices have actually been moving north since 2009 when the other thread was started.


    you are rite , I missed the bus , and I am happy that i missed it cause people who have not missed the bus and who have bought flats in 2006 on wards just have money on paper ..not in hand and also they are all victims of floating rates , so every time there is an increase in 25 basis points guess what , they have to keep aside atleast 2000 rs per month on the emi so again i am glad that i missed the bus
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  • Originally Posted by boldm28
    you are rite , I missed the bus , and I am happy that i missed it cause people who have not missed the bus and who have bought flats in 2006 on wards just have money on paper ..not in hand and also they are all victims of floating rates , so every time there is an increase in 25 basis points guess what , they have to keep aside atleast 2000 rs per month on the emi so again i am glad that i missed the bus

    What you said makes sense if you plan to stay on rent all your life, or are you hoping that rates will nosedive to 2006??
    consider you bought a flat in 2006 for 15lac, you will end up paying around 40lac(rough figures)...considering current scenario if you buy lets say even for 30 lac you end up paying more than guys who bought in 2006...of course all this is true if you are taking home loan...
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