Prices doubled from 2009...enough said....
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  • Originally Posted by BlotJab
    The important thing lies in your sentence that says "so go ahead and buy if you can afford it". I would say, 99% of the people who are seeking flats in Pune for end uses, can't afford the current prices. Only people who have already one flat (bought in 2004-2007) and net in hand income more than 1L, can buy at current rate for investment, and they are buying indeed as they have seen the growth in RE in last decade.

    The bull and bear cycle theory won't last long (at max couple of more cycles) before it comes to stabilize level ( which should be 30% less than current prices, if we see afford ability). RE Prices in metro cities are now comparable with developed countries RE prices, how can be the prices in the same range? how it will be sustained, when there is huge difference in GDP, per capita income and more importantly individual salaries?

    I could imagine if salaried people buy the flats at current rates, there will be huge financial disaster followed by emotional disaster in India.


    I have heard this flawed logic a.k.a. wishful thinking since 2004. What people dont understand that wages also rise with inflationary expectations.


    In India there is tremendous income disparity. Even if 15-20% of population can afford something then prices will continue to inch up and sustain.
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  • Originally Posted by nitesh321
    +1 stoxxx & Punerebuyer.

    Most of the members here are looking here for a house to live & not as an investment. So why try to time the market & see how much returns will it give in3-5yrs. RE is a long term investment. Four simple rules to follow:

    1. Buy if you can afford.
    2. Do not over-leverage.
    3. Find info about project/builder.
    4. Live happily. :)


    Agree completely and also with stoxx and punerebuyer.

    We have many times said the same in the "wrong" thread also.

    Buy "What" you can afford, "When" you can afford and never overleverage.

    Ideally, pay 50 % down payment, rest 50% on loan provided EMI is 25% of your "Take home" pay and you have no other loans. Buy when your career is settled and city is settled and family is completed.

    That is playing safe in my opinion. For most people, these conditions will be fulfilled probably in their early 40s. Taking a 15 year loan then is probably justified.

    Until then, rent.

    Stoxx, hill station property has poor appreciation. I have looked into this.

    It is much better to rent hotel rooms in a different hill station each time. For property buy in a metro
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  • Originally Posted by Venkytalks
    Agree completely and also with stoxx and punerebuyer.

    We have many times said the same in the "wrong" thread also.

    Buy "What" you can afford, "When" you can afford and never overleverage.

    Ideally, pay 50 % down payment, rest 50% on loan provided EMI is 25% of your "Take home" pay and you have no other loans. Buy when your career is settled and city is settled and family is completed.

    That is playing safe in my opinion. For most people, these conditions will be fulfilled probably in their early 40s. Taking a 15 year loan then is probably justified.

    Until then, rent.

    Stoxx, hill station property has poor appreciation. I have looked into this.

    It is much better to rent hotel rooms in a different hill station each time. For property buy in a metro


    Currently there is no 2BHK property available below 55L in Baner, Pashan and below 45L in pimple saudagar and below 40L in Wakad. If we go by your rule then who can afford these prices. You said give 50% money as downpayment, so end user common man should save at least 20 L before buying property in wakad only( forget about developed areas) . And if 4-5 experience guy from IIT (or any equivalent college) gets 10-12L salary package which comes around 60-70K per month after tax dedcution and PF dedcution, then how can he afford to buy 2BHK in wakad, because neither he is having 20L saved money (50% of total cost) nor his EMI will be less than 25% of take home salary (21K EMI on remaining 20L, which is upto 33% of his take home salary). So who will be able to afford these prices? As an IITian, I know how much salary talented engineers gets when they join Microsoft, google or other financial & investment companies, and if they are not able to buy house in Pune, who will be able to buy house in Pune or Mumbai, I guess only businessmen or the people who have black money or the people who had invested in RE earlier and made profit. But I can guarantee you that this bull and bear theory on RE will not last long, prices will get stablized, because if top salaried people are not able to buy flats in Pune then who will buy flat in future.
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  • I think both Stoxxx and Venky have a little exaggerated idea of the income potential of an average home buyer in a city like Pune. This is apparent by the pole taken by Stoxxx and the other thread where Venky discussed the avg income of an ITG. I would put most of the ITGs with around 5 years of experience into 8-10L Salary bracket - not a bad compensation from the way I see it. However, not enough to buy you a home in a market like Pune.

    Coming to Stoxxx's point that salaries increase with the inflation, true, but it does not increase (and never will) to a level which enables you to save 50% down payment for a 50L flat. Current inflation (unofficial) is around 11-12%, Hike declared by most IT companies in a 'good' year like 2010-11 is around 15-20%. Considering the inflation, you are only earning 4-8% more than previous year.
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  • Originally Posted by BlotJab
    Currently there is no 2BHK property available below 55L in Baner, Pashan and below 45L in pimple saudagar and below 40L in Wakad. If we go by your rule then who can afford these prices. You said give 50% money as downpayment, so end user common man should save at least 20 L before buying property in wakad only( forget about developed areas) . And if 4-5 experience guy from IIT (or any equivalent college) gets 10-12L salary package which comes around 60-70K per month after tax dedcution and PF dedcution, then how can he afford to buy 2BHK in wakad, because neither he is having 20L saved money (50% of total cost) nor his EMI will be less than 25% of take home salary (21K EMI on remaining 20L, which is upto 33% of his take home salary). So who will be able to afford these prices? As an IITian, I know how much salary talented engineers gets when they join Microsoft, google or other financial & investment companies, and if they are not able to buy house in Pune, who will be able to buy house in Pune or Mumbai, I guess only businessmen or the people who have black money or the people who had invested in RE earlier and made profit. But I can guarantee you that this bull and bear theory on RE will not last long, prices will get stablized, because if top salaried people are not able to buy flats in Pune then who will buy flat in future.


    Exactly my point - you should not buy in such situation. Just accumulate savings and buy after 3-4 years when you have 20L in savings.

    People in their 20s are not supposed to buy flats - they are supposed to excel in their careers. Money will follow and with money, flat will follow.

    As I said, own flat should be bought around 40 years or so.

    Until then, by all means put money in RE in some other form as a diversification - 30% stocks, 30% FD and 30% RE. There was this chap who was asking how to invest 25L in savings - most of us felt that he should wait till he could buy a "peoper" 3BHK. No point succumbing to pressure and taking loan to buy a substandard 2BHK.

    If he wanter RE diversification, he could put 7-10L in a shop and give on rent - if he felt upto the effort. But a small 2BHK in some corner made no sense by using up his savings as well as taking a loan.

    Nothing wrong with renting till savings bulk up
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  • Originally Posted by Venkytalks
    Exactly my point - you should not buy in such situation. Just accumulate savings and buy after 3-4 years when you have 20L in savings.

    People in their 20s are not supposed to buy flats - they are supposed to excel in their careers. Money will follow and with money, flat will follow.

    As I said, own flat should be bought around 40 years or so.

    Until then, by all means put money in RE in some other form as a diversification - 30% stocks, 30% FD and 30% RE. There was this chap who was asking how to invest 25L in savings - most of us felt that he should wait till he could buy a "peoper" 3BHK. No point succumbing to pressure and taking loan to buy a substandard 2BHK.

    If he wanter RE diversification, he could put 7-10L in a shop and give on rent - if he felt upto the effort. But a small 2BHK in some corner made no sense by using up his savings as well as taking a loan.

    Nothing wrong with renting till savings bulk up


    I understand your points, and I am not arguing the age at which you buy the house. I was mainly arguing the fact that RE prices will keep on increasing in longer or medium term. I just want to say my opinion that prices will get stabilized if not now that within 2 years. Because most of the people who are 30+ and can afford the flat, have already bought one flat or more. Now imagine new home buyer who are below 30 and don't earn 75K (or more)per month net salary, can't buy the flat in Pune right, nor they wont be able to buy in future if their salaries gets hiked by the same rate at which RE is increasing in Pune. That is what happening in Bangalore, because most of the senior employee already have one or more flat and junior employee (5-6 years experience and close to 30 years of age) are not able to afford the prices above 40L for 2BHK in outskirts of the city. That is why, we see more than 15% correction in Bangalore, and don't expect that prices will rise again in Bangalore, unless untill these junior employee gets so much salary hike that they can start buying more than one flat.

    The rule is simple, RE prices has to match the income level of middle level employee in MNC ( the range is 10-12 L today and it will be 15-18L in next 10 years, but don't expect to be above 20L as we will become new USA). So I would say, affordable RE price in todays income level (10-12L) is not more 3500 square feet and will not be more than 4500 square feet till next 7-8 years (when average middle level employee will get 15-18L). So the truth is RE prices have already appreciated beyond the sustainable limits, it may sustain for couple of more years, but eventually this bull and bear theory will not be applicable and properties rates will get stabilized.
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  • Originally Posted by BlotJab
    I understand your points, and I am not arguing the age at which you buy the house. I was mainly arguing the fact that RE prices will keep on increasing in longer or medium term. I just want to say my opinion that prices will get stabilized if not now that within 2 years. Because most of the people who are 30+ and can afford the flat, have already bought one flat or more. Now imagine new home buyer who are below 30 and don't earn 75K (or more)per month net salary, can't buy the flat in Pune right, nor they wont be able to buy in future if their salaries gets hiked by the same rate at which RE is increasing in Pune. That is what happening in Bangalore, because most of the senior employee already have one or more flat and junior employee (5-6 years experience and close to 30 years of age) are not able to afford the prices above 40L for 2BHK in outskirts of the city. That is why, we see more than 15% correction in Bangalore, and don't expect that prices will rise again in Bangalore, unless untill these junior employee gets so much salary hike that they can start buying more than one flat.

    The rule is simple, RE prices has to match the income level of middle level employee in MNC ( the range is 10-12 L today and it will be 15-18L in next 10 years, but don't expect to be above 20L as we will become new USA). So I would say, affordable RE price in todays income level (10-12L) is not more 3500 square feet and will not be more than 4500 square feet till next 7-8 years (when average middle level employee will get 15-18L). So the truth is RE prices have already appreciated beyond the sustainable limits, it may sustain for couple of more years, but eventually this bull and bear theory will not be applicable and properties rates will get stabilized.


    Absolutely true.

    Right now, there is a stabilisation going on - in fact one to two months month ago I calles the end of the bull phase and an imminent correction of 20-30% - in the "wrong" thread - and current events are proving it right. Prices will be stable for now and probably for next 2 years.

    We might have a small industrial recession in next 6 months - probably small. That will also affect sentiment going forward.

    But structural bull market in India will continue into the distant future, till you and I are dead. That is for sure. In every bull market there is a correction and it provides buying opportunity.

    Keep your cash ready in case of good deals materialising.

    In Ghaziabad area of NCR, there are many such opportunities currently available. Correction wont be long in coming to Pune also - wait - but dont wait too long after correction starts also - after some time, prices will reverse direction again.

    Timing is always difficult and hence many people advice against it. But for secong or third home purchase, timing is probably needed to some extent - at least dont completely mistime it also and buy on top of a bubble.

    Having a good sense of "worth it" is also needed. Otherwise you dont recognise a good deal and good price. A good sense of "not worth it" is also needed - otherwise you buy a white elephant at astronomical price.
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  • LOL! Hyderabad is anytime better than Pune, equipped with good infrastructure (wide roads and even public transport)...Pune is affordable for 100 crore worth Dubai group, which part of the world is not affordable to such abundantly rich ones:D
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  • Atleast there are no bandh's two day's of every month. :-)
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  • also if things go well then Hyderabad will be in Telangana

    also if things go well then Hyderabad will be in Telangana and not AP
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  • May be this rule help ..........for most salaried persons


    Follow 20-28-36 rule:
    One can also follow the 20-28-36 rule for making your home loan calculations.
    According to this popular formula, the down payment should be 20 per cent,
    the monthly home loan payments (EMI) should not be over 28 per cent of the
    household gross annual income and the total monthly payments for all debts
    including the home loan payments should not exceed 36 per cent of annual income.
    In our country presently, while evaluating home loan proposals,
    lenders have slightly relaxed rules.
    They offer EMIs up to 35-40 per cent of the gross monthly salary
    and EMI up to 40-45 per cent of the gross monthly salary for home loan plus other debts.
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  • Originally Posted by Venkytalks
    Absolutely true.

    Right now, there is a stabilisation going on - in fact one to two months month ago I calles the end of the bull phase and an imminent correction of 20-30% - in the "wrong" thread - and current events are proving it right. Prices will be stable for now and probably for next 2 years.

    We might have a small industrial recession in next 6 months - probably small. That will also affect sentiment going forward.

    But structural bull market in India will continue into the distant future, till you and I are dead. That is for sure. In every bull market there is a correction and it provides buying opportunity.

    Keep your cash ready in case of good deals materialising.

    In Ghaziabad area of NCR, there are many such opportunities currently available. Correction wont be long in coming to Pune also - wait - but dont wait too long after correction starts also - after some time, prices will reverse direction again.

    Timing is always difficult and hence many people advice against it. But for secong or third home purchase, timing is probably needed to some extent - at least dont completely mistime it also and buy on top of a bubble.

    Having a good sense of "worth it" is also needed. Otherwise you dont recognise a good deal and good price. A good sense of "not worth it" is also needed - otherwise you buy a white elephant at astronomical price.



    Agree with the above. But I still think for the first house one should look at affordability, self needs and happiness. Timing is dangerous game IMO. And if you are in it for long term which normally purchase for self residence is then one should go and buy if they can afford.

    If one cannot afford then of course they can only hope and pray for significant correction. But I would request them not to be violent at others who take different view.

    Even if there is significant correction long term buyers should not get panicky as in the long term this will outperform. Moreover owning a house that you like and sharing with your beloved ones is a joy priceless.
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  • The problem with this type calculation is.. it is not constant.

    Some time you might loose your job or you might get a new opportunity and may hike your salary or promotion. New addition to family could make your wife to quit job for a while...

    So, how do you keep those things constant.. and how does percentage work in these scenario?
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  • India Real Estate Market About to Crash Or Consolidation?

    So while you may wait for a price correction in India, one must also remember that the US real estate market was one continuous rise for 25 years till the time the house prices corrected in 2008. The question that begs an answer then, is whether the Indian real estate market has just enetered into one such bull market spanning over a decade.


    The signs of such a bull market are evident with the whole market overwhelmingly short and doubtful of a sustainable rise in home prices. It is such doubtful times that the savvy make their millions.


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