Prices doubled from 2009...enough said....
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  • But with Govt enacting laws to check the black money (Money Laundering Act), will it still be sustainable. 3-5 years down the line, RE should fall as black money dealing will be very very less...:)
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  • Originally Posted by Kimmig
    Venky .. thanks for your reply .. no offence, however, the analysis is just conjecture .. my question does not get answered .. how can people in India who's average income is lower than that of similarly qualified US people afford OR let me put it this way .. continue to afford as if they are going out of style .. such high priced dwellings? Especially when our home loan rates are in the stratoshpere compared to US ..
    Does this question stump others on the board as well or am I just plain stupid?

    Housing demand / supply gap is just a myth propagated by builders / Times of India / Congress .. there is enough and more land available .. in fact there are enough and more vacant flats available .. which are just being hoarded by these scamsters, politicians and the so-called "investor idiots". Your analysis is completely on the spot in your earlier post .. the Congi Govt itsels does not want people from the jhopadpattis / ghettos to move out so that they can protect their vote bank.



    perhaps you can go thru this thread

    https://www.indianrealestateforum.com/forum/city-forums/pune-real-estate/8408-value-for-money--indian-cities-vs-rest-of-world?t=10848

    in few post later there is comparison based on Urban dwellers of same class in developed world and Indian Cities ...
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  • Originally Posted by stoxxx
    Dont forget the black money when looking at demand for RE as investment...most RE investment is made to hide black money.....there is almost insatiable demand for RE in India


    Again .. a myth, I feel .. really .. how many people have access to the sort of Black Money needed to support such a huge investments??
    Most of those I know and in my immediate circle work a job for a living .. agreed there are scams worth hundreds of thousands of crores .. however the scams are perpetrated by a handful few .. a finite number .. your neighbourhood traffic constable who you tikao 100-200 Rs as bribe cannot buy these places.

    The more I think abt this .. it looks like there are just not enough moneybags lying around to support .. the problem is that these moneybags are turning up at multiple places giving builders an impression that there is a lot of money floating in the market .. which is giving them confidence to hold on to their prices and increase them at will .. in turn, giving the moneybags who put in their money earlier a sense that prices will continue to rise indefinitely and insanely .. and they in turn hold on to their invstments choking supply .. futher negating any chances of price pressure on the builders .. its just a vicious circle .. gotta break it
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  • Originally Posted by Kimmig
    Again .. a myth, I feel .. really .. how many people have access to the sort of Black Money needed to support such a huge investments??
    Most of those I know and in my immediate circle work a job for a living .. agreed there are scams worth hundreds of thousands of crores .. however the scams are perpetrated by a handful few .. a finite number .. your neighbourhood traffic constable who you tikao 100-200 Rs as bribe cannot buy these places.

    The more I think abt this .. it looks like there are just not enough moneybags lying around to support .. the problem is that these moneybags are turning up at multiple places giving builders an impression that there is a lot of money floating in the market .. which is giving them confidence to hold on to their prices and increase them at will .. in turn, giving the moneybags who put in their money earlier a sense that prices will continue to rise indefinitely and insanely .. and they in turn hold on to their invstments choking supply .. futher negating any chances of price pressure on the builders .. its just a vicious circle .. gotta break it


    I guess you have not personally seen the customers carrying cash in gunny bags (of the kind in which we buy 50 KG rice) to the offices of builders in Connaught place (Delhi). Yes, at least in Delhi NCR it happens even today that people carry 500 and 1000 rupee notes in big gunny bags to book flats/plots in bulk.

    The guys with moneybags don't care if they are getting 3% ROI or 15% ROI. For them real estate is a place where massive amounts of black money can be safely parked for future generations.
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  • Originally Posted by mymarji
    But with Govt enacting laws to check the black money (Money Laundering Act), will it still be sustainable. 3-5 years down the line, RE should fall as black money dealing will be very very less...:)


    attempted humor or optimism at its best
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  • As you like it. YMMV. :)
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  • Provided their future generations survives their misdeeds. Once a person starts saving for his future generations, he starts the rot in his lineage. This is the reason that makes these future generations so used to free money (read: without sweat or khoon-pasina) that they get spoilt. These are the things that start corrupting the society, like a virus.

    I like the animals/birds that only think till the time their future generations can take care of themselves without thinking of saving for them. The ability to stand up in this world is the most important thing rather than saving for future generations. American follow this method, hence you can see where their society is today. Of course there are advantages/disadvantages of each society.

    Kaabil bano, kamyaabi apne aap jjhak marke peeche ayegi (Source: 3Idiots).

    But do these people care about all this. They forget that their future generations have to stay in the same society that they are so careless about. Hope they realize this before its too late.

    Sorry for the cribbing tone, need to release my steam somewhere. :bab (35)::bab (4):

    Originally Posted by ThePunjabi
    The guys with moneybags don't care if they are getting 3% ROI or 15% ROI. For them real estate is a place where massive amounts of black money can be safely parked for future generations.
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  • Originally Posted by wiseman
    Friend,

    Assuming an 85% loan on the home and 12% avg interest (pa) and 55000 as EMI, your interest alone comes to 7.85 L.

    Consider that almost all the gain (which you call savings) is what you have given to the bank as interest. The price differential is the only "saving" which has been paid for by you.

    If you have the discipline (99.99% don't) you could force yourself to save the 55k pr month and be cash rich beyond your expectations! :D

    cheers


    Well the rent that he will pay will have to be removed from the saving that you have shown :). But the numbers do make sense. Sadly, we don not always follow numbers while doing purchases. Equating a home to only numbers is a mistake. However ignoring numbers and buying emotionally is even worse. Some best practices I would follow are:


      Loan above 30L is a strict no however much your salary maybe.
      Loan amount of more than 40% of a man's in hand income will never let you enjoy your house as you would want too. Too many women are now working with little kiddos in day cares so that they can afford a house. I just feel women should be making it a conscious choice rather than just work to pay off EMIs to a super greedy bank.
      Buy a smaller home if you have to rather than stretch too much. Then furnish the house well to maximize your space availability.
      Do not believe in RE predictions. Too many variables for any one person or group to accurately predict. If you have the money and can afford it, buy it. If you cannot then don't worry. Keep saving and wait for the right time. Bangalore is an example of the fact that RE rates do stabilize beyond a point.
      Don't give too much importance to extra amenities such as pool, gym etc. If you find a good resale without this and its within your budget, then go for it. Bargain hard with the broker and you will be surprised how much discount he can arrange.

      Too all the house hunting friends out there, just one message. Do not despair at the ever increasing rates. Buy when you can and what you can afford. It's not point living in a golden cage.
      Too all the house hunting friends out there, just one message. Do not despair at the ever increasing rates. Buy when you can and what you can afford. It's not point living in a golden cage.
      Too all the house hunting friends out there, just one message. Do not despair at the ever increasing rates. Buy when you can and what you can afford. It's not point living in a golden cage.
      Too all the house hunting friends out there, just one message. Do not despair at the ever increasing rates. Buy when you can and what you can afford. It's not point living in a golden cage.
      Too all the house hunting friends out there, just one message. Do not despair at the ever increasing rates. Buy when you can and what you can afford. It's not point living in a golden cage.
      Too all the house hunting friends out there, just one message. Do not despair at the ever increasing rates. Buy when you can and what you can afford. It's not point living in a golden cage.
      Too all the house hunting friends out there, just one message. Do not despair at the ever increasing rates. Buy when you can and what you can afford. It's not point living in a golden cage.
      Too all the house hunting friends out there, just one message. Do not despair at the ever increasing rates. Buy when you can and what you can afford. It's not point living in a golden cage.
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  • I do agree with these views. Well written.

    Better invest some of your earning so that when the right time comes, you can make a good deal. There will be many opportunities in future, all cities are booming, so there is no dearth of RE unless all land is developed, which may not happen for another 100 years atleast. So enjoy....

    Originally Posted by akssenti
    Well the rent that he will pay will have to be removed from the saving that you have shown :). But the numbers do make sense. Sadly, we don not always follow numbers while doing purchases. Equating a home to only numbers is a mistake. However ignoring numbers and buying emotionally is even worse. Some best practices I would follow are:


      Loan above 30L is a strict no however much your salary maybe.
      Loan amount of more than 40% of a man's in hand income will never let you enjoy your house as you would want too. Too many women are now working with little kiddos in day cares so that they can afford a house. I just feel women should be making it a conscious choice rather than just work to pay off EMIs to a super greedy bank.
      Buy a smaller home if you have to rather than stretch too much. Then furnish the house well to maximize your space availability.
      Do not believe in RE predictions. Too many variables for any one person or group to accurately predict. If you have the money and can afford it, buy it. If you cannot then don't worry. Keep saving and wait for the right time. Bangalore is an example of the fact that RE rates do stabilize beyond a point.
      Don't give too much importance to extra amenities such as pool, gym etc. If you find a good resale without this and its within your budget, then go for it. Bargain hard with the broker and you will be surprised how much discount he can arrange.

      Too all the house hunting friends out there, just one message. Do not despair at the ever increasing rates. Buy when you can and what you can afford. It's not point living in a golden cage.
    CommentQuote
  • Originally Posted by Kimmig
    Venky .. thanks for your reply .. no offence, however, the analysis is just conjecture .. my question does not get answered .. how can people in India who's average income is lower than that of similarly qualified US people afford OR let me put it this way .. continue to afford as if they are going out of style .. such high priced dwellings? Especially when our home loan rates are in the stratoshpere compared to US ..
    Does this question stump others on the board as well or am I just plain stupid?

    Housing demand / supply gap is just a myth propagated by builders / Times of India / Congress .. there is enough and more land available .. in fact there are enough and more vacant flats available .. which are just being hoarded by these scamsters, politicians and the so-called "investor idiots". Your analysis is completely on the spot in your earlier post .. the Congi Govt itsels does not want people from the jhopadpattis / ghettos to move out so that they can protect their vote bank.


    How?

    Because of short term effects persisting for a decade. Rupee has stayed at 45 to dollar for last 10 years. Hence all this distortion. THe last decade has been a little crazy and removed from fundamentals. With so much imbalance, something has to give.

    Our housing prices are not the only things which have inflated - there has been general inflation os an average 6-7% in this decade vs some 2-3% in USA over this decade (ball park figures).

    In other words, there is a bubble in India, but the bubble is not in our RE so much as in our currency - we have an abnormally strong currency because a lot of imaginary economic strength is being counted as real. And hot money is filling our reserves.

    When this imaginary strength vanishes, it is not the RE prices which will come down to earth, but our currency value.

    I reproduce below an anonymous post from India's housing bubble blog, which is relevant to the discussion

    If real estate prices crash (in Rupees), the GOI will simply repeat what they did in 2008-2009, they will print money until nominal real estate prices are stabilized. The dollar is a very weak currency that is constantly declining against all other international currencies over the past decade, yet the exchange rate of the Rupee has not budged against the dollar. This tells me that the Rupee is structurally a very weak currency that is capable of being pumped and primed to hide any deflationary effects. As late as 2009-10 when you needed to mortgage your children to buy a bag of onions, our omniscient and omnipotent Prime Minister was warning of the bogeyman of "deflation".
    If real estate prices fall (again, in nominal terms), all home-owners have to do is to wait for the RBI/GOI to rescue them with another round of inflation.
    When I was growing up, a lakh was a very huge sum of money. A lakhpathi was considered a very wealthy man. A Crorepathi was someone wealthy beyond imagination. Today, a lakh is the monthly salary of many professionals and a Crore can't even get you a 2 Bedroom apartment in many Indian cities. The people who bought their homes for lakhs 20 years ago are laughing all the way to the bank because they are paying back their Rupee mortgages now with MASSIVELY depreciated money.
    NEVER UNDERESTIMATE THE POWER OF INFLATION TO BENEFIT THE HIGHLY-LEVERAGED AND THE RECKLESS WHILE SIMULTANEOUSLY PUNISHING SAVERS AND THE PRUDENT.
    My father bought a motor vehicle in 1975 which he sold in 2000 for a HIGHER price (in Rupee terms) than what he paid for it in 1975. There are not many countries in the world where even normally depreciating assets become more "valuable" over time.
    This is India. This is the Indian Rupee. In this environment, asset prices have only one direction: UP. Prudent and canny Indians will wait out any slowdown by waiting for the ameliorating effects of inflation to catch up.
    Print, Print, Print...


    Wiseman, pearls of wisdom from you on how I buy RE - I totally agree.
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  • Originally Posted by Venkytalks
    How?

    Because of short term effects persisting for a decade. Rupee has stayed at 45 to dollar for last 10 years. Hence all this distortion. THe last decade has been a little crazy and removed from fundamentals. With so much imbalance, something has to give.

    Our housing prices are not the only things which have inflated - there has been general inflation os an average 6-7% in this decade vs some 2-3% in USA over this decade (ball park figures).

    In other words, there is a bubble in India, but the bubble is not in our RE so much as in our currency - we have an abnormally strong currency because a lot of imaginary economic strength is being counted as real. And hot money is filling our reserves.

    When this imaginary strength vanishes, it is not the RE prices which will come down to earth, but our currency value.

    I reproduce below an anonymous post from India's housing bubble blog, which is relevant to the discussion

    If real estate prices crash (in Rupees), the GOI will simply repeat what they did in 2008-2009, they will print money until nominal real estate prices are stabilized. The dollar is a very weak currency that is constantly declining against all other international currencies over the past decade, yet the exchange rate of the Rupee has not budged against the dollar. This tells me that the Rupee is structurally a very weak currency that is capable of being pumped and primed to hide any deflationary effects. As late as 2009-10 when you needed to mortgage your children to buy a bag of onions, our omniscient and omnipotent Prime Minister was warning of the bogeyman of "deflation".
    If real estate prices fall (again, in nominal terms), all home-owners have to do is to wait for the RBI/GOI to rescue them with another round of inflation.
    When I was growing up, a lakh was a very huge sum of money. A lakhpathi was considered a very wealthy man. A Crorepathi was someone wealthy beyond imagination. Today, a lakh is the monthly salary of many professionals and a Crore can't even get you a 2 Bedroom apartment in many Indian cities. The people who bought their homes for lakhs 20 years ago are laughing all the way to the bank because they are paying back their Rupee mortgages now with MASSIVELY depreciated money.
    NEVER UNDERESTIMATE THE POWER OF INFLATION TO BENEFIT THE HIGHLY-LEVERAGED AND THE RECKLESS WHILE SIMULTANEOUSLY PUNISHING SAVERS AND THE PRUDENT.
    My father bought a motor vehicle in 1975 which he sold in 2000 for a HIGHER price (in Rupee terms) than what he paid for it in 1975. There are not many countries in the world where even normally depreciating assets become more "valuable" over time.
    This is India. This is the Indian Rupee. In this environment, asset prices have only one direction: UP. Prudent and canny Indians will wait out any slowdown by waiting for the ameliorating effects of inflation to catch up.
    Print, Print, Print...


    Wiseman, pearls of wisdom from you on how I buy RE - I totally agree.


    Now what i understood from this is (if my understanding true) That the prices for RE and commodities will never come down....what may come down is its value....
    A house purchase in jan 2011 for 45L, will never come down...to 40L....

    What will come down is value of 45L and hence the same flat would be selling at 45L in Dec-2011.....but due to inflation and printing more money....value of 45L in Dec-2011 is actually equates to 40L in Jan-2011.....

    quite complex!!!! :D
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  • Originally Posted by rajtjrll
    Now what i understood from this is (if my understanding true) That the prices for RE and commodities will never come down....what may come down is its value....
    A house purchase in jan 2011 for 45L, will never come down...to 40L....

    What will come down is value of 45L and hence the same flat would be selling at 45L in Dec-2011.....but due to inflation and printing more money....value of 45L in Dec-2011 is actually equates to 40L in Jan-2011.....

    quite complex!!!! :D


    Not exactly.

    I said (in earlier post) that both can happen and is most likely to happen.

    i.e. Prices come down but not by 50% dictated by reversion to mean of India/US housing prices. Instead only 20-25% price corrects and the rest is made up by currency depreciation.

    When crazy imbalances like this correct, everything which can give way does tend to give way.

    PErson who believes in RE bulls theory being wrong, believes prices will correct 50% (as it should)

    Person who believes in RE bulls theory being right , believes other things like currency value, inflation etc will take the brunt of the correction and that RE prices will not come down.

    Person who is sensible believes both will happen - but since the exact percentages are difficult to quantify, he ends up being a fence sitter. I myself am a fence sitter and so have both RE investments and gold investments (as well as stocks and bonds) - which guard against all eventualities.

    Most sensible theory to believe is in the TIME CORRECTION: SO RE prices will stand still for a long while waiting for the other prices to equalise and normalise - by this belief, RE prices should stand still for two years.
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  • Wealth mostly inherited

    Originally Posted by mymarji
    Provided their future generations survives their misdeeds. Once a person starts saving for his future generations, he starts the rot in his lineage. This is the reason that makes these future generations so used to free money (read: without sweat or khoon-pasina) that they get spoilt. These are the things that start corrupting the society, like a virus.

    I like the animals/birds that only think till the time their future generations can take care of themselves without thinking of saving for them. The ability to stand up in this world is the most important thing rather than saving for future generations. American follow this method, hence you can see where their society is today. Of course there are advantages/disadvantages of each society.

    Kaabil bano, kamyaabi apne aap jjhak marke peeche ayegi (Source: 3Idiots).

    But do these people care about all this. They forget that their future generations have to stay in the same society that they are so careless about. Hope they realize this before its too late.

    Sorry for the cribbing tone, need to release my steam somewhere. :bab (35)::bab (4):


    Recent research done worldwide has shown that over 85% of wealth that a generation shows is inherited from previous generation and not created.

    Those are the facts.

    I agree with you on the other thing. In my own family, the great-grandfather happened to acquire 9 acres (at 10ps / SFt) back in 1911 by accident. Much of it was spent away by previous 2 generations and net wealth destruction happened. The small amount of land left is still worth crores (at 12k / SFt) and now its upto the current generation to rebuild the wealth back at least somewhat!!!

    Btw, over 100 years exactly, the compounded rate of growth on this property (which was a jungle in those days - my mother says they used to hear jackals in the night back in the 1940s, imagine what it would have been in 1915! :D) is around 12.40%!

    From the boondocks to one of the most prime areas in Chennai, one of the most resilient cities in terms of RE over such a long term (accounts for 2 world wars, indepndence, boomtimes, etc). Gives you an idea what you can expect in the long run!

    Go Figure!

    cheers
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  • not exactly True

    Originally Posted by Venkytalks
    How?

    Because of short term effects persisting for a decade. Rupee has stayed at 45 to dollar for last 10 years. Hence all this distortion. THe last decade has been a little crazy and removed from fundamentals. With so much imbalance, something has to give.

    Our housing prices are not the only things which have inflated - there has been general inflation os an average 6-7% in this decade vs some 2-3% in USA over this decade (ball park figures).

    In other words, there is a bubble in India, but the bubble is not in our RE so much as in our currency - we have an abnormally strong currency because a lot of imaginary economic strength is being counted as real. And hot money is filling our reserves.

    When this imaginary strength vanishes, it is not the RE prices which will come down to earth, but our currency value.

    I reproduce below an anonymous post from India's housing bubble blog, which is relevant to the discussion

    If real estate prices crash (in Rupees), the GOI will simply repeat what they did in 2008-2009, they will print money until nominal real estate prices are stabilized. The dollar is a very weak currency that is constantly declining against all other international currencies over the past decade, yet the exchange rate of the Rupee has not budged against the dollar. This tells me that the Rupee is structurally a very weak currency that is capable of being pumped and primed to hide any deflationary effects. As late as 2009-10 when you needed to mortgage your children to buy a bag of onions, our omniscient and omnipotent Prime Minister was warning of the bogeyman of "deflation".
    If real estate prices fall (again, in nominal terms), all home-owners have to do is to wait for the RBI/GOI to rescue them with another round of inflation.
    When I was growing up, a lakh was a very huge sum of money. A lakhpathi was considered a very wealthy man. A Crorepathi was someone wealthy beyond imagination. Today, a lakh is the monthly salary of many professionals and a Crore can't even get you a 2 Bedroom apartment in many Indian cities. The people who bought their homes for lakhs 20 years ago are laughing all the way to the bank because they are paying back their Rupee mortgages now with MASSIVELY depreciated money.
    NEVER UNDERESTIMATE THE POWER OF INFLATION TO BENEFIT THE HIGHLY-LEVERAGED AND THE RECKLESS WHILE SIMULTANEOUSLY PUNISHING SAVERS AND THE PRUDENT.
    My father bought a motor vehicle in 1975 which he sold in 2000 for a HIGHER price (in Rupee terms) than what he paid for it in 1975. There are not many countries in the world where even normally depreciating assets become more "valuable" over time.
    This is India. This is the Indian Rupee. In this environment, asset prices have only one direction: UP. Prudent and canny Indians will wait out any slowdown by waiting for the ameliorating effects of inflation to catch up.
    Print, Print, Print...


    Wiseman, pearls of wisdom from you on how I buy RE - I totally agree.


    not exactly true
    It was hovering at 52 from 2008 to 2009

    http://www.advfn.com/p.php?pid=qkchart&symbol=FX^USDINR
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  • Originally Posted by boldm28
    not exactly true
    It was hovering at 52 from 2008 to 2009

    http://www.advfn.com/p.php?pid=qkchart&symbol=FX^USDINR


    It went from 43 to 53 within about a month. Then it came back slowly to 47, then 45.

    Example of how quickly currencies can move and totally screw up an investment or an economy of an entire country. And how contrary to normal wisdom and normal expectations.

    The next major global disruption will be a currency imbalance - thats my bet. Some people (the gold bugs) believe we are already within the currency disruption
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