Hello All:
I plan to buy a property in Aundh. Does any one know the prevailing rates for this area in the current market scenerio. I am getting unreliable information from a number of sources. I have read some real good posts on this site....please provide your valuable guidance

Thanks -
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  • @badanalyst Just one point.
    You missed the tax savings you get on homeloan. if u consider that he has shown his house as leased out .
    The intrest per yr on HL of 35 L at 10 % in yr 1 would be arnd 3.5 L. and will get decreased every yr.

    Now depending upon the tax bracket he comes in , dat alone gives him a saving of arnd
    95K - 90 K in 30 % tax bracket.
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  • Originally Posted by Ashishjagani
    @badanalyst Just one point.
    You missed the tax savings you get on homeloan. if u consider that he has shown his house as leased out .
    The intrest per yr on HL of 35 L at 10 % in yr 1 would be arnd 3.5 L. and will get decreased every yr.

    Now depending upon the tax bracket he comes in , dat alone gives him a saving of arnd
    95K - 90 K in 30 % tax bracket.


    Another good point . Also made a small mistake, the SIP should be of Rs 34,000 not Rs 36,000. (hey, I'm not named badanalyst for nothing :D)

    HRA is also tax exempt. Thus for a salaried individual earning around 8 lpa, he can get HRA exemption of 70-80k per year (depending on his/her basic, actual rent etc). Also, not having a home loan burden increases your chances of using up the entire 1 lakh exemption in 80C as well. I think the difference overall in tax savings should not exceed 10-15k of income tax per year. Does anyone have actual figures for this ? Assuming you're paying an EMI of Rs 34000 per month, how much of the taxable income is deducted in years 1,2,3,4 of his home loan payment ?
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  • I am having a HL of 35 L at 10.25 % which gets me an EMI of 34xxx RS per month. This is my 1st yr

    Now i have shown it as leased out. So i get deduction in principle in 80 C upto 60 K this yr.
    + 3.5 L over and above 80 C for intrest component.
    + HRA exemption of 90 K

    So there is tremendous tax savings. I dont pay a single Re as tax now.
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  • I am having a HL of 35 L at 10.25 % which gets me an EMI of 34xxx RS per month. This is my 1st yr

    Now i have shown it as leased out. So i get deduction in principle in 80 C upto 60 K this yr.
    + 3.5 L over and above 80 C for intrest component.
    + HRA exemption of 90 K

    So there is tremendous tax savings. I dont pay a single Re as tax now.
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  • Originally Posted by Ashishjagani
    I am having a HL of 35 L at 10.25 % which gets me an EMI of 34xxx RS per month. This is my 1st yr

    Now i have shown it as leased out. So i get deduction in principle in 80 C upto 60 K this yr.
    + 3.5 L over and above 80 C for intrest component.
    + HRA exemption of 90 K

    So there is tremendous tax savings. I dont pay a single Re as tax now.


    Excellent ! Thanks for that. So lets apply these calculations to this scenario. I have got my hands on a loan schedule from Loan Amortization calculator | Amortization Calculator.

    Here are the parameters :
    Loan amount :Rs 34 lakh
    Interest rate : 10.25%
    Tenure : 240 months

    After 48 months of this loan payment. Here is the breakup of what the loan bearer has paid so far :

    Interest paid : 13,17,163 (Rs 13.17 lakh)
    Principal paid : Rs 251,509
    Loan outstanding : Rs. 31,44,157
    Installments paid : 48

    So what is the real worth of his property today ?
    Using the same parameters as before (7300 / sq ft)
    Value of flat : Rs 73 lakh (not counting taxes here as that obviously dont get credited to the sellers account)
    Minus loan outstanding : 41,55,843
    Adding tax savings @65,000 per year* for 4 years: Rs 2,60,000



    *over a person with same income without home loan (Assuming income here of approximately Rs 11 lakh per annum CTC or 70,000-73,000 per month in hand post tax, and the non home loan guy is using up entire quota of 80CC and HRA as well) .

    Without home loan

    Total equity in hand ~ Rs 40 lakh
    Minus Income tax outgo Rs 2.6 lakh = Rs 37.4 Lakh


    So there is a case here, for these past 4 years, in this particular scenario for having bought a home vs not bought in Aundh as there is a difference of Rs 4 lakh approximately.

    Edited to add : I am obviously making an assumption here, that a 4 year old flat will sell at the same price (Rs 7300 / sq ft). I am also not considering Capital gains tax here, because we're considering a situation of whether a home buyer would have been better off buying in 2009 or buying now after saving, for end use. All we're trying to do here is to find out whether people missed the bus completely by not having invested in Aundh in 2009. I have also not considered the effect of inflation on this.
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  • If the person has given the flat on rent ( Assuming hebought ready possession).
    I am taking 12 K per mnth ( average) rent for 4 yrs gives me 5.76 L for 4 yrs.

    Another point to be noted here is right now you feel that there is no difference in house buyed now or later , but If you keep on extending this logic for say 10 yrs or 12 yrs, we see a trend where your

    rates dont come so down for an old home in a well established location. SO a new flat in Wakad will be selling at same rate a 10 yr old house in Aundh. or may be even higher

    but as intrest payments on loan gets reduced you see the difference in buying then and now goes on increasing in favour of buying then.
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  • Originally Posted by Ashishjagani
    If the person has given the flat on rent ( Assuming hebought ready possession).
    I am taking 12 K per mnth ( average) rent for 4 yrs gives me 5.76 L for 4 yrs.

    Another point to be noted here is right now you feel that there is no difference in house buyed now or later , but If you keep on extending this logic for say 10 yrs or 12 yrs, we see a trend where your

    rates dont come so down for an old home in a well established location. SO a new flat in Wakad will be selling at same rate a 10 yr old house in Aundh. or may be even higher

    but as intrest payments on loan gets reduced you see the difference in buying then and now goes on increasing in favour of buying then.


    Well, but the flip side to this argument is this : Over a long run, investment in a large cap mutual fund beats a purchase in a flat hands down. If we're talking of something like 10 years, the returns that MFs have given are just astounding. In comparison, a 10 year old flat will fetch anywhere between 10-20% lesser than the rate of a new building in the same area.

    Take a 10 year period in MFs, and you will see that the returns have been much better than Real Estate. The last 4 years have seen a major bear run in the stock market, and a period of unusually high volatility with near constant returns. On the other hand, RE has steadily gone up over the past 4 years. Inspite of this we have to agree that other asset classes, especially MFs have kept in touch with RE.

    Here's some examples for you :
    Absolute returns :

    HDFC top 200 :

    May 1, 2003 - May 1, 2013 : 1,153 %
    May 1, 2002 - May 1, 2012 : 1,078 %
    May 1, 2001 - May 1, 2011 : 1,416 %

    Has RE in a flat given this kind of returns ? A 10x return on a purchased flat is very very unlikely, while it is quite possible in a fund of large cap companies in India - please note this includes two major upheavals in the stock market apart from constant volatility. A 10 year old building on the other hand will start to plateau out in terms of rate, because of depreciation kicking in as the building gets older.

    Two sides of this story.

    Even if we consider an SIP story here, from 2003 - 2013, the picture is very favorable towards India's most highly subscribed Mutual fund (the probability of investment in a fund like HDFC top 200 or Franklin India Bluechip is very high) :

    From May 1, 2003 - May 1, 2013
    An SIP of Rs 25,000 per month is worth :

    Investment Period : May 01, 2003 to May 01, 2013
    No of Investments : 121
    Total Amount Invested (Rs) : 3,025,000.00
    Total Units Purchased : 36,091.54
    Investment Value as on May 01, 2013 : 8,065,449.74

    Rs 80 Lakh, tax free, highly liquid money. CAGR of 18% per annum, which also is probably as good if not better than the RE boom from 2003-2013, even if we cover for rental outgo for 10 years
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  • Like the above analysis. Good and based on facts.
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  • Originally Posted by badanalyst
    Well, but the flip side to this argument is this : Over a long run, investment in a large cap mutual fund beats a purchase in a flat hands down. If we're talking of something like 10 years, the returns that MFs have given are just astounding. In comparison, a 10 year old flat will fetch anywhere between 10-20% lesser than the rate of a new building in the same area.


    Its OK for some people but for me I cannot purchase mutual fund and stay in it, like i can do if i buy new home.:o
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  • So what are the latest rates in Aundh ?
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  • Latest rates are around 1.3+ (negotiable) in places like ITI road or ashiyana park, for 3 bhk above 1500 sq ft (loading at 25%, terrace 50%) . Newer constructions will go over 1.7 Cr +.

    Not sure if they have come down in the last 3 months because of RE slowdown.
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  • Originally Posted by Sat234
    Latest rates are around 1.3+ (negotiable) in places like ITI road or ashiyana park, for 3 bhk above 1500 sq ft (loading at 25%, terrace 50%) . Newer constructions will go over 1.7 Cr +.

    Not sure if they have come down in the last 3 months because of RE slowdown.


    So that's more than 11000 psft! I didn't know it was this costly in Aundh
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  • Originally Posted by LalaLala
    Its OK for some people but for me I cannot purchase mutual fund and stay in it, like i can do if i buy new home.:o


    the question is that how much premium are you willing to pay to live in your own house instead of buying mutual funds which give the same returns?

    risk being assumed equal, the rate of return of mutual funds will always be more than that of a house if you consider the liquidity aspect of mutual funds. if you are living in a house, then its no longer an investment. even if the house rate triples, you will not be able to cash in on your investment.
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  • Originally Posted by compuwalah
    So what are the latest rates in Aundh ?


    i was reading 7000 to 8000 is the going rate. not sure what kind of buyers they are targeting in that range.
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  • Terreza in aundh .. new scheme.. quoted me over 2 cr. Didn't even ask him the area. Aloma county resales are about 1.2 and negotiable.
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