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Builders & Real Estate Bulls Theory Proved Wrong

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Builders & Real Estate Bulls Theory Proved Wrong

Last updated: November 1 2016
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  • Re : Builders & Real Estate Bulls Theory Proved Wrong

    Originally posted by anirban8 View Post
    I think you missed some lines in the article. Let me quote -

    "For lenders such as SBI and Bank of Maharashtra, NPAs are still under 1%."
    "Frauds in a branch in Chandigarh have pushed up the number for us. If you take that out then the ratio is not so high," said a P&SB executive
    "An executive at Uco Bank said that the number mentioned in the finance ministry report was incorrect, while Syndicate Bank could not be reached for comment. "

    Exactly. Even with such high interest rates if the NPAs of SBI are 1% then its great news. No wonder all the doom predictions have turned out to the utterly wrong. People dont generally default on home loans and if there is a few who do the banks can recoup their investment by auctioning the house.

    "For public sector banks as a whole, NPA in the segment was estimated at 1.5% at the end of September, a tad higher than 1.4% at March-end.

    At the current level, NPAs in the entire home loan segment add up to around Rs 6,000 crore, which is less than the amount involved in sticky loans to some of the corporate houses such as Vijay Mallya's Kingfisher Airlines. "

    If the banks had avoided Kingfisher and some other crap accounts we would have not seen a massive rise in NPAs. Dont blame RE for the NPAs. RE has saved the banks so far.

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    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      RE NPAs

      The percentage is not important.
      What is important is how many people constitute this 1.5%?
      Has the number of people wh are defaulting in House increased alarmingly?
      No point saying the whole NPA from housing loan is less than King Fisher NPA.
      They fall in different categories.
      if number of people are increasing after taking home loan, banks need to analase why.
      Banks would done their checks of income and other eligibility criteria.
      Where did the bank fail?
      Where did the person who took loan fail.
      Most of us who take loans have clear intention to repay.
      Where did our calculation go wrong making us default?Answers to these question would probably be more helpful.

      Comment


      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Originally posted by vaibav123 View Post
        RE NPAs

        The percentage is not important.
        The % is the most important factor. Banks borrow at x% lend at y% and pay out salaries, other expenses and NPA contingencies from the (y-x)%.

        Good bank have a net margin of more than 3%. The % is the most important thing in banking.


        What is important is how many people constitute this 1.5%?
        Has the number of people wh are defaulting in House increased alarmingly?
        No point saying the whole NPA from housing loan is less than King Fisher NPA.
        Why not. Its a fact. If banks has been extra careful in looking at the business plan of just account it would have saved them crores. Airlines are known to struggle. Airlines around the world have not made profit in the last 100 years. It should be quite easy for a professional banker to know not to lead to airlines. HDFC did not lend to Kingfisher. How come they avoid all such crazy schemes.

        They fall in different categories.
        Why? Just cause we have a thread to beat down RE when the facts are totally different? Is that the reason we need to treat them different so we have something to argue about?

        if number of people are increasing after taking home loan, banks need to analase why.
        Banks would done their checks of income and other eligibility criteria.
        Where did the bank fail?
        Where did the person who took loan fail.
        Most of us who take loans have clear intention to repay.
        Where did our calculation go wrong making us default?Answers to these question would probably be more helpful.
        The figures in that article are Gross NPA and not Net NPA. RE has the lowest NPA of all the sectors that bank lend to. Banks would die to have NPAs like the RE NPAs of 1% gross.

        All those question you are asking about RE apply to every sector. PSU banks dont care who they lend to. The govt always bails them out. Their RE lending has been super profitable unlike their lending to agri and medium and small sector.

        Comment


        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          its funny how the finance "experts" speak....

          If the market goes up by 30%, its the next big bull run so everybody should get in. If market falls by 30%, it is THE BEST TIME to invest in the markets.

          Now is definitely NOT the best time to make a property investment. have these experts even looked at the equity markets?

          RE is still over-valued compared to the earning power of the demographic profile of the people who live there and is bound for a long protracted period of stagnation.
          ...Thoda Aasman

          Comment


          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            Originally posted by amit007 View Post

            Further, I said that lower prices' in chain store is only due to existence of said small businesses. Otherwise, there will be cartel among big chain-stores and days of lower prices will get over. Your answer misses this point in entirety.
            Wrong!!! If India has a robust legal system and legal enforcement, then the small businesses will NOT be able to evade taxes and big businesses will not be able to form cartels. The CCI (Competition Committee of India) should take of that.

            Moreover, the small businesses will never be able to sell at prices below the chain stores. The big stores have economies of scale, mature processes, heavy investment in infrastructure and professional management. Small businesses will always have a lot of inefficiencies which will eventually be passed on to the consumer.

            Said 'check & balances' / 'audit is only to avoid revenue leakages internally for such big-chains. And, same need not be ensuring evasion of taxes - both Income Tax and VAT, if owner of such chains so desires. (By the way, I operate in the field of audit / tax planning / internal control etc.)
            are you sure you have attended all years of college? All public companies in india must have internal audit!!! The auditors, the board of directors are all legally responsible for internal risk controls and ensuring that the proper checks and balances are in place. Along with internal auditors, you also have external auditors who will point out if the internal audit team is doing something funky.

            The owners of listed companies DO NOT have the leeway to decide what portions of their business can be audited. They are answerable to SEBI, to investors and to the government at larger.


            Giving bill by big chains does not necessarily mean paying income tax on such transactions. Further, even small businessman pays VAT / Sales Tax when it buy goods from big business.
            that's my point, the quantum of tax evasion done by small businesses is huge as compared to large ones as they have to operate under the legal framework.

            Point is if small business is so lucrative, as made sound by you by repeating words like BMW / Bungalows etc, why not to start such business instead of having looser's remorse.

            Running businesses - small or big is not easy and having multiple risks involved. Maximum people - working class guy as referred by you - does not willing to take that risk & handle multiple issues associated with running business. Even so called potential to own BMW / Bungalow do not make compel 'working class guy' to chose business.
            We know that businessmen take risks, but that is no excuse to evade taxes!!!

            As said earlier, there are many cases of tax evasion but same can be there even for big businessman / chain stores and 'not to shop with small businessman ' is not the solution, as I feel.
            in fact it is an obvious solution!! Imagine two 25 year olds, one working class and one who has inherited his business from his pop and both of them earn 1 lakh Rs per month.

            For the salaried guy, 30% straight-away goes into TDS. Whatevers left of it, he has to run his house, pay bills and end up with a small amount of disposable income at the end.

            For the businessman, %tax depends on what income he wishes to show. Moreover, he will go on to buy fancy cars, fancy phones as show them as business expenses. What's more a lot of bills will get passed off as business expenses. So it is possible that this business guy might pay close to 5% tax and hence end up with a large sum of disposable income; a large percentage of which is black.

            Now this black money will be channeled into Real Estate or even basic day to day commodities thereby pushing up inflation, the brunt of which is borne more by the salaried guy.

            So yes, not shopping at tax evaders is one way you can reduce the quantum of black money in the country. same goes for builders as well. there are a lot of big builders in india who deal in 100% check, no funny business like selling parking, no cash component. It's better to deal with such builders and have piece of mind then to deal with crooks and thereby perpetuate the cycle of black money!!!

            The taxpaying breed in India is an almost extinct breed. Screw the small businesses, save the taxpayers!!!
            ...Thoda Aasman

            Comment


            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Originally posted by ThodiSiZamin View Post
              its funny how the finance "experts" speak....

              If the market goes up by 30%, its the next big bull run so everybody should get in. If market falls by 30%, it is THE BEST TIME to invest in the markets.

              Now is definitely NOT the best time to make a property investment. have these experts even looked at the equity markets?

              RE is still over-valued compared to the earning power of the demographic profile of the people who live there and is bound for a long protracted period of stagnation.
              It is interesting to see still RE bulls are pitching their points...

              go to the market and talk to the 'brokers' and 'investors'. They all are crying silently and if they cry making noise then their misery is bound to increase.

              New set of bakras are not arrived / not available. People who can invest all have invested there is nobody waiting in the sidelines to invest in RE. This is the fact.

              Now all we need is a good trigger. I expected stock crash can be a trigger but mad money printing stopped it. So unless money printing in the west stops, our RE cannot fall that easily but if the current slump continues many brokers will go broke

              Comment


              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Originally posted by realacres View Post
                If state property registration department figures are any indication, Mumbai's real-estate market is in dire straits and it could collapse anytime. In October 2014, the government could earn only Rs 15.19 crore from 16,700 properties that were registered.

                In fact, figures suggest that the market has been consistently sliding since January 2014.

                Where's the market headed?

                According to Kapoor, the market is economically unproductive and inefficient. "Developers are also in a catch-22 situation. Earlier, they increased rates for better profits. Now sales are not happening and inventory is piling up. If the situation does not change, the market will collapse sooner than later," he said.

                It's official: With no big deals, property market's losing life | Latest News & Updates at Daily News & Analysis
                This Kapoor guy is your favourite, isn't it

                Anyway this is nothing new. This is being posted since last 3 years.
                btw what was this state property registration data for past 4 years ?

                The guy only saying "Can I make som emoney by posting this stale news ?" One should know how to read news. For that you need to have read through lotsa IREF posts and cross checked news/reality. Then you understand how to filter out noise.

                If all this is true you should be seeing this being on every TV channel, newspaper, not some corner sitting Kapoor "mari awaaz suno" kinda.

                Comment


                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  Originally posted by realacres View Post
                  Banks are seeing a sudden spurt in bad debt in the home loan segment, a warning that RBI issued last week.

                  Typically, home loans and other loans have been insulated from the issue of bad debt as home owners make sure that they pay their EMIs on time. A loan turns into NPA if no installment is paid for 90 days at a stretch.

                  Home loans see rising bad debt - The Times of India

                  ^^ This news now shows that home buyers who over-leveraged themselves & thought that RE prices will only keep increasing & bought the flat are in mess. Rise in home loan NPAs clearly shows the ill-effects of buying beyond capacity or buying based on some PROPOSED stuff which is more of speculation than fundamentals.
                  Ok. "spurt" "sudden" "bad debt" "warnign" oh my gosh what else news is there

                  Anyway herohoralal has already put proper perspective on this NPA issue.
                  no much point discussing this further. Evidence in that this trumpet of rising NPA is begin blown since 2009 and RE price are going up by ___% on an average in last five years in light of "this" increasing NPA (a kitkat who fills up the blanks correctly .. he/she can buy on his/her own :P ). It occurs to me that (reading through tonnes of posts in last 5 years) if you are creative enough, you can always twist the facts to look like what you want them to look like . Especially if people are not well informed, then you get that extra edge ...

                  Comment


                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    Originally posted by realacres View Post
                    The latest MPI report for the third quarter of 2014, indicates softening in property rates in major cities in India. Home buyers had adopted a wait and watch approach for a longer duration owing to high property rates & an even higher home loan interest rates.

                    Indian property market is always considered as a strong seller’s market but the latest Property Index (MPI) indicates that the property market has now started showing signs of turning in favour of buyers. The latest MPI report for the third quarter of 2014, indicates softening in property rates in major cities in India. Home buyers had adopted a wait and watch approach for a longer duration owing to high property rates & an even higher home loan interest rates. This reduced the volume of property transactions considerably leading to an increase in unsold inventory in most Indian real estate markets. In the quarter July 2014 to September 2014, there are steep downward swings in property prices across all the major cities and sub-cities. Mumbai, Delhi, Kolkata, Ahmedabad, Bangalore,Hyderabad , Pune, Gurgaon and Faridabad registered a drop.



                    Best time to make a property Investment: Makaan Property Index - Moneycontrol.com
                    great stat. btw I am just wondering what was this index in Jul-Sep 2009, Jul-Sep 2010, Jul-Sep 2011 , Jul-Sep 2012, and Jul-Sep 2013. Any 3 would do

                    Comment


                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Originally posted by mangoman2012 View Post
                      go to the market and talk to the 'brokers' and 'investors'. They all are crying silently and if they cry making noise then their misery is bound to increase.
                      Din't want to post this but -

                      Not sure about this but I know surely the people who followed the bearish posts of doomsday predictions and posponed their buying for last 5 years mostly are ...
                      Last edited by compuwalah; November 25 2014, 08:52 AM.

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