Hereby I will prove how the realty boomers arguments are false.

What are the boomers arguments?

1.) Buy today, houses always increase in value in the long run.
WRONG. House prices cannot increase more than incomes in the long run. This is obvious if you think about it. If house prices go up more than people can afford to pay, buying stops, like it has stopped now.
Even Warren Buffett have pointed out that houses don't increase in intrinsic value. Unless there's a bubble or a crash, house prices simply reflect current salaries and interest rates. If a house is 100 years old, it's value in sheltering you is exactly the same as it was 100 years ago. Then came the maintenance as the house didn't renovate itself. It also has taxes, and insurance - costs that always increase and never go away. The price of the house went up about as much as salaries went up.
To put this is simple perspective, vegetable were costing Rs.5-6/kg when 5 digit salary was a rarity.
Today, the prices have gone up by about 4 times but so have the salaries. So, sounds very much like the reasoning people use now when they talk about how much their father's house appreciated "in the long run" without considering that salaries rose a proportional amount.

2.) Renting is just wastage of money.
WRONG. As said before renting is now much cheaper per month than owning. If you don't rent, you either:

* Have a mortgage, in which case you are throwing away money on interest, tax, insurance, maintenance, costs that increase forever.
* Own outright, in which case you are throwing away the extra income you could get by converting your house to cash, investing in bonds, and renting a similar place to live for much less money. This extra income is sufficient for emergency expenses,retirement etc.

Either way, owners lose much more money every month than renters and that's assuming prices don't correct to very high level & everything is smooth in the economy.

3.) As a renter, you won't have any money left as you will spend them on vacations,cars & hence won't have equity/savings etc.
WRONG. Equity is just money. Renters are actually in a better position to build equity/savings through investing in anything but housing. Renters can get rich much faster than owners, just by investing in conservative stocks & bonds.

* Owners are losing every month by paying much more for interest than they would pay for rent. The tax deduction does not come close to making owing competitive with renting.
* Owners must pay taxes simply to own a house. That is not true of stocks, bonds, or any other asset that can build equity/savings. Only houses are such a guaranteed drain on cash.
* Owners must insure a house, but not most other investments.
* Owners must pay to repair a house, but not a stock or a bond.
* Owners lose their money as house prices reduce. The EMI's remain constant in spite of reduction in rates. At the end of loan tenure, they would have paid almost twice than that of current renters who will buy at logical rates. Keep interest rates in mind. Most of the EMI is not principal amount but interest.

4.) There are great tax advantages to owning a house.
WRONG. Many people believe you can just reduce your income tax by the amount you pay in interest, but they are wrong. Buyers may not deduct interest from income tax; they deduct interest from taxable income. And even then, the tax advantage is not significant compared to the large monthly loss from owning.

If you don't own a house but want to live in one, your choice is to rent a house or rent money to buy a house. To rent money is to take out a loan. A mortgage is a money-rental agreement. House renters take no risk at all, but money-renting owners take on the huge risk of falling house prices, as well as all the costs of repairs, insurance, property taxes, etc.

5.) RE is based on local factors, it's not a national phenomenon. RE of Delhi-NCR,Bangalore & rest of the cities has nothing to do with Pune RE.
WRONG. Lending rates remain the same throughout the country. ALL loans are harder to get. This will drive prices down everywhere.

6.) A rental house provides good income. So, you can rent if you have purchased as investment.
WRONG. Rental houses provide very poor income in hyped areas and certainly cannot cover mortgage payments. Remember there is almost 300% difference between EMIs & rent for the same house.

It's pointless to do the work of being a landlord if you can make more money with no risk, no work, and no state income tax by investing in assured good returns bond.

7.) If owning is a loss in monthly cash flow, but appreciation will make up for it.
WRONG. Appreciation is negative. Prices are going down. It only adds to the injury of already high EMI's.

8.) As soon as prices drop a little, the number of buyers on the sidelines willing to jump back in increases.
WRONG. There are very few buyers left, and those who do want to buy will be limited by increasing difficulty of borrowing now that many house owners are near bankrupt as they don't save anything at the end of the month due to high EMI's.
No one has to buy, but there will be more and more people who have no choice but to sell as their payments rise. That will keep driving prices downward for a long time.

9.) House prices never fall atleast in Pune.
WRONG. If you see the RE scenario of 1996, prices crashed by 50% & took a whole 7+ years to recover.
Exact 1996 scenario may not be there today but strong correction is inevitable across the city.

10.) House prices don't fall to zero like stock prices, so it's safer to invest in real estate.
WRONG. House prices won't be zero, but the equity or the principal amount you paid can be zero or even negative. What you will pay as EMIs later in actual terms is not for the principal amount but only the interest as house prices dip. So, you will be only serving the bank.

11.) Prices will soften gradually, won't crash immediately.
WRONG. Prices are falling off a cliff. No one knows exactly what will happen, but it looks like prices will continue to fall for long time. These are just more manipulation of buyer emotions, to get them to buy even while prices are falling.

12.) The bubble prices were driven by supply and demand alone.
WRONG. Prices were driven by low interest rates and risky loans & good returns for investors in initial phases of boom in 2004-05.
Prices went up, interest rates went up & buyers savings went down. So prices are violating the most basic assumptions about supply and demand.

13.) There is lack of land.
WRONG. Ample of land is available & continue to be even in future in Pune. Sales volume are down. Even in Japan (small country with less land), prices went down. Current prices here are the same as that of 23 years ago. If we really had a housing shortage, there would not be so many vacant rentals.

14.) If you don't own, you'll live in a cheap neighborhood later.
WRONG. For the any given monthly payment, you can rent a much better house than you can buy. Renters live better, not worse. There are downsides to renting, such as being told to move at the end of your lease, or having your rent raised, but since there are thousands of vacant rentals, you can take your pick and be quite happy renting during the crash. There are similar but worse problems for owners anyway, such as being fired and losing your house, or having your interest rate and property taxes adjust upward. Remember, property taxes are forever.

15.) There's always someone predicting a real estate crash.
TRUE, yet irrelevant. There are very real crashes every decade or so. Even a broken clock is right twice a day.

16.) Local incomes justify the high prices.
WRONG. The mortgage should be more than your 3 years earning. It is much higher today. Most are already in danger/red zone.

17.) You have to live somewhere.
CORRECT. But that doesn't mean you should waste your life savings on a bad investment. You can live in a better house for much less money by renting during the down slide in RE.

18.) It's not a house, it's a home.
WRONG. Wherever one lives in it is home, be it apartment, condo, bungalow , mansion or house. Calling a house a "home" is a manipulation of your emotions for profit.

19.) If you don't buy now, you'll never get another chance.
WRONG. History proves otherwise.
Here's a beautiful quote from a analyst:-
"The real issue isn't whether you will be stuck being a renter all your life, she says. Its whether you'll get so scared about being shut out that you'll buy at the market's peak and be stuck in a property you can't afford or sell."

20.) It would take major economic recession or a major earthquake that wipes out this area in order for the price to fall by over 50%.
WRONG. Even today, if the prices fall by 50%, there will still be very few people who can buy at this levels due to uncertainty in jobs & most importantly high EMIs. Also, look at the rental rates for equivalent houses. Which loss per month is larger? EMI or rent?

contd....
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  • Originally Posted by Sharpj
    I never said that.. it is generalization which I never implied.. They are doing good for the state and it will be a miracle for Congress to beat them there..
    BJP in Maharashtra was nothing to write home about
    They are a mess in Karnataka.. much better than gowdas.. but not upto the mark..


    Well, mention of BJP in your very first reply to my question aimed at heretic was simply uncalled for. Anyway whoever rules that state I was not hoping to get such political response that its safe/peaceful/successful being ruled with BJP:D:bab (45):. EOM
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  • Govt to Keep Tight Vigil on End Use of FDI Inflows

    One more hammer for builders who use FDI as source of funding, in several cases, the Mafia too uses this route to fund RE projects. So, bad for builders once again. Banks are gone, so has FDI.

    The government plans to keep a tight vigil on foreign investment inflows by making it mandatory for companies bringing in foreign equity to periodically disclose the end-use of such funds. The Economic Intelligence Council (EIC), led by finance minister Pranab Mukherjee , has called for ‘full disclosure’ of FDI details by the industry. The department of industrial policy & promotion (DIPP) is working on a format for submitting information to the government.

    Currently, there is no mechanism for monitoring the actual use of FDI and regulatory agencies do not go beyond mandatory clearances at the time of approving foreign investment proposals. This has the government worried since it does not want FDI flows to be exploited for money laundering or diversion of foreign investment flows for speculation in the stock market or real estate.

    The government wants to put in place a detailed system to make companies come out with full details of ownership, background of promoters, sourcing of funds and investment history, said an official with DIPP, who asked not to be named due to the sensitive nature of the issue and the involvement of security agencies.

    The Reserve Bank of India had also asked the government to get either administrative departments or state governments to monitor end use of FDI inflows. The Intelligence Bureau , the National Security Council and the EIC have also discussed the issue, the official said. The home ministry and the working group on intelligence apparatus, a co-ordination committee set up under the leadership of the revenue secretary, are also involved in the discussions. Mandatory disclosures would mean additional paperwork for the companies. If deviations are found during monitoring, penal action will be taken against erring companies.

    The National Security Council has been working on an umbrella legislation to ensure that FDI policy does not clash with national security concerns. Since work on the proposed legislation has slowed down due to differences of opinion within the government, the EIC is now handling some of the issues like monitoring of FDI.

    The EIC’s mandate is to improve co-ordination among enforcement and intelligence agencies dealing with economic offences and the income tax /customs wings of the department of revenue. The Council is supposed to come up with an oversight mechanism to evolve policy responses to economic offences. Among the first sectors to come under scanner when the new mandatory reporting norms kick in would be FDI in private banks, power, greenfield airports, real estate and breweries, another government official said.

    While 100% FDI is allowed in these sectors through the automatic route, these segments are subject to sectoral guidelines. Since no clearances are required for these sectors, the companies concerned keep the RBI informed. In fact, there is no provision under the FDI policy or Foreign Exchange Management Act (FEMA) for which RBI is the nodal agency. Violation of FEMA guidelines lead to imposition of penalty by RBI, but this happens mostly in cases where the offender voluntarily discloses the violation.

    The RBI has been in touch with the DIPP over the issue, the official said. The central bank’s concern is primarily about diversion of FDI inflows into real estate for speculation. While there are restrictions on acquisition of property by non-residents other than NRIs and PIOs, the curbs are circumvented by bringing funds into companies that are meant to operate in the hotels or tourism sector. Such speculation can lead to asset bubbles in real estate, the RBI feels.


    Source:- IRN.
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  • Heretic, you have restated the "property price will fall" bear theory of this blog beautifully.

    Unfortunately, I think this wont happen - because I believe that the Rupee will devalue by inflation of Rupee prices and depreciation of rupee - until todays astronomical RE prices become justified.

    Some one said village prices are rising. Actually they have doubled. Because farm produce (food) has doubled in price, the price of the land which produces that food has also become double.

    In these inflationary times, sitting on cash is the worst thing you can do. You should spend your money before it devalues and buys less.

    Waiting for a price correction is foolishness - it wont happen - maximum is a time based correction - i.e prices standing still - for about 2 years more.

    From 2014/15, if you postponed your RE purchase for own use, you will regret it. If you are in a position to afford a flat and actually need a flat for own use, buy what you can affors right NOW - prefereably a close to completion project.

    For investors 2013/14 is probably the best time to enter, with the widely anticipated RE cycle uptrend of 7-8 years (after 2006)
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  • Originally Posted by Sharpj
    Dehradun is safe.. Uttaranchal is been ruled by BJP after it has been formed (from UP). It is in a hilly region (Himalayas) and it is very very beautiful.
    Many of our Indian army officers and soldiers are from this region.

    Is it no more ruled by NDT ? The shoukeen aadmi.
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  • Originally Posted by realacres
    Irrespective of what you said, one thing is clear:- Mango man will loose respect for all the names mentioned above. Now how many will trust what Barkha Dutt says on NDTV or Vir Sanghvi in HT?? Those people who don't like these journos will now ask to them that look what you have done first than asking us any Qs.

    As far as Mukesh Ambani is concerned, he is nothing short of white collar don. Even his new house, Antillia stands on wakf board land & he got the land for 21 Cr as against market rate of 150 Cr+.

    Here is why opposition will keep hammering this:-

    Most likely, there is noone involved in this scam, atleast when proof is concerned. They now get chance to hit PM, Sonia left, right & centre.

    In case of CWG, the CBI has arrested key Kallu aides like Lalit Bhanot today morning & this has made Kallu very tense, first hand report.

    When we talk about RE & builders, this scam is sufficient for builders to get loans by managing some people in bank. Some nice article has been written in IE on housing scam. Will post it here after I find it on net.

    * Both houses of Parliament have been adjourned today as well:D.


    What about Ratan TATA??? he also caught this time talking with Nira radia...And as you were in politics in some time of your life, I think you might be very well know what Credibility means for politician...Everybody Knows what is the credibility of Shard Pawar & Ajit dada...still he is DY CM of this mah...same goes with Bangalore CM as well...and about barkhat Dutt, everybody knows How credible is out ENGLISH Media:bab (34):
    I will be agree with you the day when I see kallu & Pawar behind the Bars & that will be the victory of mango man:bab (59):
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  • Originally Posted by puser
    Dont know what BJP ruling had to do with safety, i was asking from perspective of crimes and insurgency(maoism/naxalism etc) if any.


    I'm tired of answering doubts about Uttaranchal away, that is a BIG achievement. away, that is a BIG achievement.
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  • Originally Posted by Venkytalks
    Heretic, you have restated the "property price will fall" bear theory of this blog beautifully.

    Unfortunately, I think this wont happen - because I believe that the Rupee will devalue by inflation of Rupee prices and depreciation of rupee - until todays astronomical RE prices become justified.

    Some one said village prices are rising. Actually they have doubled. Because farm produce (food) has doubled in price, the price of the land which produces that food has also become double.

    In these inflationary times, sitting on cash is the worst thing you can do. You should spend your money before it devalues and buys less.

    Waiting for a price correction is foolishness - it wont happen - maximum is a time based correction - i.e prices standing still - for about 2 years more.

    From 2014/15, if you postponed your RE purchase for own use, you will regret it. If you are in a position to afford a flat and actually need a flat for own use, buy what you can affors right NOW - prefereably a close to completion project.

    For investors 2013/14 is probably the best time to enter, with the widely anticipated RE cycle uptrend of 7-8 years (after 2006)


    I still beg to differ, Venky. Firstly, when I say 'sit on ur cash', its not to be taken in the literal sense. My own example: i had purchased a 2bhk flat in Palace Orchard, NIBM Ext, in 2005 Dec for 7.70 lacs, all inclusive. Sold it in Dec 2009 for 22.5 lacs. To date, I've not only preserved the capital, but added 3 lacs to it by a combination of investments That's more than the bank rate -- and RE rates have not moved on NIBM Road in the past year.

    I think that if you can preserve ur capital and make it grow at around 10% PA, that rate of growth will outstrip the rate of appreciation in RE -- because RE is already so overpriced in Pune that it has limited upside -- maybe. But my gut feeling is still that Pune is not a special case in the world, and RE prices there will have to find sane levels. If people cannot afford it, they will not go for it, or they will simply leave Maharashtra and seek out affordable places -- as I have done. That's more than the bank rate -- and RE rates have not moved on NIBM Road in the past year.

    I think that if you can preserve ur capital and make it grow at around 10% PA, that rate of growth will outstrip the rate of appreciation in RE -- because RE is already so overpriced in Pune that it has limited upside -- maybe. But my gut feeling is still that Pune is not a special case in the world, and RE prices there will have to find sane levels. If people cannot afford it, they will not go for it, or they will simply leave Maharashtra and seek out affordable places -- as I have done.
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  • Originally Posted by heretic
    BJP may not be totally above board, but their governance is lot better than Congress. Uttaranchal shares common borders with Nepal & China, but crime rate is very low. Lower than Pune, certainly. BJP has kept the Naxals, Maos etc away with an iron hand not only in Uttaranchal, but also in Himachal. Consideing that China border is less than 500 kms away, that is a BIG achievement.
    Irrespective of the state, BJP ruled state has better law & order situation & higher GDP growth rates. Latest eg. is Bihar where people voted BJP-JD(U) for progress & security & note that BJP won even in Muslim dominated seats, & BJP has even Muslim MLAs. This indicates that the division of Congress based on caste & Laloos Muslim-Yadav equation no longer holds true. At the end of the day, if law & order is bad, everyone suffers irrespective of caste & not to forget that 54,000 criminals were either shot dead or put behind bars under Nitesh-Modi (Sushil) administration in past 5 yrs.

    Again, if you see bomb blasts & terrorists activities in the country, most blasts have taken place in Congress ruled states:- Delhi, Maharashtra, AP.

    Btw, as far as I know, even cops are happy when BJP is in power as it is the sole party which has least interference with them & offer free hand to crack-down on terrorists. In BJP-SS rule, so many bangus were kicked out (deported) but after Congress came back, these bangus are back in Mumbai:bab (45):.

    * Gujarat though not known much for agri this year recorded max increase in food output in the country while Bihar GDP grew at 11.4%!! MP & Chattisgarh have 10+% growth rate & Gujarat a tad higher. Btw, BJP introduced POTA, Congress removed it which shows on whose side Congress is. Had POTA been there, Kasab would have been already dead.
    Irrespective of the state, BJP ruled state has better law & order situation & higher GDP growth rates. Latest eg. is Bihar where people voted BJP-JD(U) for progress & security & note that BJP won even in Muslim dominated seats, & BJP has even Muslim MLAs. This indicates that the division of Congress based on caste & Laloos Muslim-Yadav equation no longer holds true. At the end of the day, if law & order is bad, everyone suffers irrespective of caste & not to forget that 54,000 criminals were either shot dead or put behind bars under Nitesh-Modi (Sushil) administration in past 5 yrs.

    Again, if you see bomb blasts & terrorists activities in the country, most blasts have taken place in Congress ruled states:- Delhi, Maharashtra, AP.

    Btw, as far as I know, even cops are happy when BJP is in power as it is the sole party which has least interference with them & offer free hand to crack-down on terrorists. In BJP-SS rule, so many bangus were kicked out (deported) but after Congress came back, these bangus are back in Mumbai:bab (45):.

    * Gujarat though not known much for agri this year recorded max increase in food output in the country while Bihar GDP grew at 11.4%!! MP & Chattisgarh have 10+% growth rate & Gujarat a tad higher. Btw, BJP introduced POTA, Congress removed it which shows on whose side Congress is. Had POTA been there, Kasab would have been already dead.
    Irrespective of the state, BJP ruled state has better law & order situation & higher GDP growth rates. Latest eg. is Bihar where people voted BJP-JD(U) for progress & security & note that BJP won even in Muslim dominated seats, & BJP has even Muslim MLAs. This indicates that the division of Congress based on caste & Laloos Muslim-Yadav equation no longer holds true. At the end of the day, if law & order is bad, everyone suffers irrespective of caste & not to forget that 54,000 criminals were either shot dead or put behind bars under Nitesh-Modi (Sushil) administration in past 5 yrs.

    Again, if you see bomb blasts & terrorists activities in the country, most blasts have taken place in Congress ruled states:- Delhi, Maharashtra, AP.

    Btw, as far as I know, even cops are happy when BJP is in power as it is the sole party which has least interference with them & offer free hand to crack-down on terrorists. In BJP-SS rule, so many bangus were kicked out (deported) but after Congress came back, these bangus are back in Mumbai:bab (45):.

    * Gujarat though not known much for agri this year recorded max increase in food output in the country while Bihar GDP grew at 11.4%!! MP & Chattisgarh have 10+% growth rate & Gujarat a tad higher. Btw, BJP introduced POTA, Congress removed it which shows on whose side Congress is. Had POTA been there, Kasab would have been already dead.
    Irrespective of the state, BJP ruled state has better law & order situation & higher GDP growth rates. Latest eg. is Bihar where people voted BJP-JD(U) for progress & security & note that BJP won even in Muslim dominated seats, & BJP has even Muslim MLAs. This indicates that the division of Congress based on caste & Laloos Muslim-Yadav equation no longer holds true. At the end of the day, if law & order is bad, everyone suffers irrespective of caste & not to forget that 54,000 criminals were either shot dead or put behind bars under Nitesh-Modi (Sushil) administration in past 5 yrs.

    Again, if you see bomb blasts & terrorists activities in the country, most blasts have taken place in Congress ruled states:- Delhi, Maharashtra, AP.

    Btw, as far as I know, even cops are happy when BJP is in power as it is the sole party which has least interference with them & offer free hand to crack-down on terrorists. In BJP-SS rule, so many bangus were kicked out (deported) but after Congress came back, these bangus are back in Mumbai:bab (45):.

    * Gujarat though not known much for agri this year recorded max increase in food output in the country while Bihar GDP grew at 11.4%!! MP & Chattisgarh have 10+% growth rate & Gujarat a tad higher. Btw, BJP introduced POTA, Congress removed it which shows on whose side Congress is. Had POTA been there, Kasab would have been already dead.
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  • I completely agree with heretic above.
    Originally Posted by Venkytalks
    Heretic, you have restated the "property price will fall" bear theory of this blog beautifully.

    Unfortunately, I think this wont happen - because I believe that the Rupee will devalue by inflation of Rupee prices and depreciation of rupee - until todays astronomical RE prices become justified.

    Some one said village prices are rising. Actually they have doubled. Because farm produce (food) has doubled in price, the price of the land which produces that food has also become double.

    In these inflationary times, sitting on cash is the worst thing you can do. You should spend your money before it devalues and buys less.

    Waiting for a price correction is foolishness - it wont happen - maximum is a time based correction - i.e prices standing still - for about 2 years more.

    From 2014/15, if you postponed your RE purchase for own use, you will regret it. If you are in a position to afford a flat and actually need a flat for own use, buy what you can affors right NOW - prefereably a close to completion project.

    For investors 2013/14 is probably the best time to enter, with the widely anticipated RE cycle uptrend of 7-8 years (after 2006)

    To cut long story short, the RE prices have increased much, much higher than inflation rates. So, if you have inflation adjusted rates, RE prices still should be lower. You talk about land in villages, but then still they haven't increased the way RE prices here have & even if they have in some cases, the rise in farm rates almost nullify this in normal circumstances, but have rents been doubled? NO. You buy agri land & earn proportionately, same is not the case by buying a flat. Note the difference.

    Higher inflation also means higher interest rates, making RE even more expensive than inflation adjusted rates. Infact, having high inflation means more deposit rates as well!! Note that high inflation means more expense for same goods which translates in less savings making cash even more lucrative.

    I think cash (FD), gold (SIP based investment) are best bet for now than RE as RE prices are already more than inflation adjusted ones, atleast in Pune, Delhi & Mumbai.
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  • Originally Posted by realacres
    I completely agree with heretic above.

    To cut long story short, the RE prices have increased much, much higher than inflation rates. So, if you have inflation adjusted rates, RE prices still should be lower. You talk about land in villages, but then still they haven't increased the way RE prices here have & even if they have in some cases, the rise in farm rates almost nullify this in normal circumstances, but have rents been doubled? NO. You buy agri land & earn proportionately, same is not the case by buying a flat. Note the difference.

    Higher inflation also means higher interest rates, making RE even more expensive than inflation adjusted rates. Infact, having high inflation means more deposit rates as well!! Note that high inflation means more expense for same goods which translates in less savings making cash even more lucrative.

    I think cash (FD), gold (SIP based investment) are best bet for now than RE as RE prices are already more than inflation adjusted ones, atleast in Pune, Delhi & Mumbai.


    We know, realacres and many others feel this way. That RE prices will come down. And people should wait. I am simply stating alternative scenarios.

    Heretic, buying at 7 and selling at 22 makes you an investor. Good for you. And a canny investor does not enter at high prices - they stay away. I agree with your instinct completely. For investment, it is not worth it at current RE prices.

    For own use, it is a different matter. Finding a property in preferred location and size, taking a loan, completing a transaction - all of these are time consuming activities. It is better to do this in a bear market than after the bull phase starts - when property prices might quickly spiral to beyond one's affordability.

    All over India, with the exception of Maharashtra (Mumbai) which is badly overpriced and Gurgaon in NCR (some 20% overpriced for its location), all other places are currently in bear market. Prices are some 20-30% less than the 2007 peak.

    Pune I am not sure. I think you are saying flat cost is some 3000 psf? That is maybe 20% overpriced max.

    Ponder over some inflation/depreciation scenarios also:

    1. Farm land is the ultimate source of all urban land. If the price in farm has doubled, in the vicinity of city it will triple or quadruple. Basically people are simply holding on and refusing to sell, waiting for many crores to happen.

    2. Imagine Rupee depreciates to 90 to a dollar - possible if valuations return to sanity (currently Rupee is grossly overvalued at 45 - based only on FII inflow and totally against our competitiveness. - STEEL PRICES WILL DOUBLE. What wil lhappen to flat cost?

    3. If Rs depreciates so much, everyone will get massive raises including IT which will become extremelty competitive. It will fuel massive inflation.

    4. Rents will go up - it is already going up in Delhi by some 10-20% per annum.

    5. Petrol price will go up. Food will go up. Cost of everything will go up.

    Real, you are totally right - in inflation, having money to live is crucial. But having to pay astronomical rent, competing against all the highly paid ITGs who can afford more rent - that will make life impossibly for the normal person.

    If you can afford it, if you need a flat for yourself, if you dont take on so much EMI that it kills you, if you dont have a transferable job - if it is not just a speculative investment - with all these ifs, this is the right time to buy (except maybe in some pockets like Mumbai, Pune, Gurgaon, where one can wait for a year or two)

    Remember, 15 years from now, flat prices are going to be somewhere else.

    Remember 1984, 2L flat became 20L in 1994.

    And 2004 20L flat became 80L in 2008.

    (Thats Delhi)

    Both happened in COngress govts and Janata govts - both widely known for running horrendously inflationary govts.

    Whatever growth seen in India today is due to the 1998-2004 BJP policies. Current Congress has done very little - except tax and spend. Even the current IPOs have little to do with disinvestment and everything to do with selling stake without selling control to raise money which goes into their pocket.

    You can expect 2010 prices of 80L (Delhi) to become some astronimical thing in 2020 - pick your number. And your currency and economy will be destroyed in the process.

    Re. Dehradun, I have been there. Very beautiful. Some IT company can easily set up campus there and make prices reach Pune Bangalore levels soon. Also visited Salt lake Kolkata recently, also looks ripe for an ITG invasion and roaring RE prices.

    Cheers, Venkat
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  • Originally Posted by heretic
    I still beg to differ, Venky. Firstly, when I say 'sit on ur cash', its not to be taken in the literal sense. My own example: i had purchased a 2bhk flat in Palace Orchard, NIBM Ext, in 2005 Dec for 7.70 lacs, all inclusive. Sold it in Dec 2009 for 22.5 lacs. To date, I've not only preserved the capital, but added 3 lacs to it by a combination of investments That's more than the bank rate -- and RE rates have not moved on NIBM Road in the past year.



    When RE rates has been moved upword by around 15% all over pune since Dec 2009 why they have not moved in NIBM Road ?

    When RE rates has been moved upword by around 15% all over pune since Dec 2009 why they have not moved in NIBM Road ?

    When RE rates has been moved upword by around 15% all over pune since Dec 2009 why they have not moved in NIBM Road ?

    When RE rates has been moved upword by around 15% all over pune since Dec 2009 why they have not moved in NIBM Road ?
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  • Originally Posted by Venkytalks

    Ponder over some inflation/depreciation scenarios also:
    2. Imagine Rupee depreciates to 90 to a dollar - possible if valuations return to sanity (currently Rupee is grossly overvalued at 45 - based only on FII inflow and totally against our competitiveness. - STEEL PRICES WILL DOUBLE. What wil lhappen to flat cost?

    3. If Rs depreciates so much, everyone will get massive raises including IT which will become extremelty competitive. It will fuel massive inflation.

    4. Rents will go up - it is already going up in Delhi by some 10-20% per annum.

    5. Petrol price will go up. Food will go up. Cost of everything will go up.

    Above points are contrary to what economists predict.

    If INR depreciates to 90 against dollar, it will surely cause hyper-inflation. Who wants home-loan rate > 15% :D

    FED is going to print more dollars with QE-x. In effect dollar will gradually depreciate against most world currencies including INR. With more long term FII inflows, INR will strengthen gradually.
    USA has huge liabilities in 10's of Trillion dollars. The only way it can survive financially, is by more savings, depreciating dollar (inflation is FED goal), moving to manufacturing/export oriented economy.

    Petrol prices can grow significantly provided there is similar growth in USA and Europe. Else it will hamper growth. It's not going to reach peak of 2008 in medium-term (3 years).

    I am renting in Pune for last 3 years and even with double-digit inflation, my rent has gone-up avg 6% annually only.
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  • Originally Posted by Venkytalks


    Re. Dehradun, I have been there. Very beautiful. Some IT company can easily set up campus there and make prices reach Pune Bangalore levels soon. Also visited Salt lake Kolkata recently, also looks ripe for an ITG invasion and roaring RE prices.

    Cheers, Venkat


    we always only talk about service sector. I believe we need a good mix of service and manufacturing for good growth.. like it is in Gujarat. I have noticed that purely service oriented growth gives instant result, but does not have any long term impact as there is no corresponding investment in infrastructure.. which is a bane in our country.. and services keep growing and infrastructure is way way behind..

    Salt Lake.. Calcutta .. looked great since 2005 2006.. but you need a whole generation of communists to pass off before you can see some real improvement in WB.. Didi also has no real plans other than becoming the CM of WBengal..
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  • Shoukeen grandfather ruled it for 5 years.. After that it has been BJP who did decent in Assembly but did not do well in Lok sabha (Rahul Magic???) .. CM lost his job and there is a new BJP CM..

    But is a beautiful place.. though don't ever make the mistake of stepping into Haridwar station during those Mela times..

    Originally Posted by HemantDesh
    Is it no more ruled by NDT ? The shoukeen aadmi.
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  • Originally Posted by Venkytalks
    We know, realacres and many others feel this way. That RE prices will come down. And people should wait. I am simply stating alternative scenarios.

    Heretic, buying at 7 and selling at 22 makes you an investor. Good for you. And a canny investor does not enter at high prices - they stay away. I agree with your instinct completely. For investment, it is not worth it at current RE prices.

    For own use, it is a different matter. Finding a property in preferred location and size, taking a loan, completing a transaction - all of these are time consuming activities. It is better to do this in a bear market than after the bull phase starts - when property prices might quickly spiral to beyond one's affordability.

    All over India, with the exception of Maharashtra (Mumbai) which is badly overpriced and Gurgaon in NCR (some 20% overpriced for its location), all other places are currently in bear market. Prices are some 20-30% less than the 2007 peak.

    Pune I am not sure. I think you are saying flat cost is some 3000 psf? That is maybe 20% overpriced max.

    Ponder over some inflation/depreciation scenarios also:

    1. Farm land is the ultimate source of all urban land. If the price in farm has doubled, in the vicinity of city it will triple or quadruple. Basically people are simply holding on and refusing to sell, waiting for many crores to happen.

    2. Imagine Rupee depreciates to 90 to a dollar - possible if valuations return to sanity (currently Rupee is grossly overvalued at 45 - based only on FII inflow and totally against our competitiveness. - STEEL PRICES WILL DOUBLE. What wil lhappen to flat cost?

    3. If Rs depreciates so much, everyone will get massive raises including IT which will become extremelty competitive. It will fuel massive inflation.

    4. Rents will go up - it is already going up in Delhi by some 10-20% per annum.

    5. Petrol price will go up. Food will go up. Cost of everything will go up.

    Real, you are totally right - in inflation, having money to live is crucial. But having to pay astronomical rent, competing against all the highly paid ITGs who can afford more rent - that will make life impossibly for the normal person.

    If you can afford it, if you need a flat for yourself, if you dont take on so much EMI that it kills you, if you dont have a transferable job - if it is not just a speculative investment - with all these ifs, this is the right time to buy (except maybe in some pockets like Mumbai, Pune, Gurgaon, where one can wait for a year or two)

    Remember, 15 years from now, flat prices are going to be somewhere else.

    Remember 1984, 2L flat became 20L in 1994.

    And 2004 20L flat became 80L in 2008.

    (Thats Delhi)

    Both happened in COngress govts and Janata govts - both widely known for running horrendously inflationary govts.

    Whatever growth seen in India today is due to the 1998-2004 BJP policies. Current Congress has done very little - except tax and spend. Even the current IPOs have little to do with disinvestment and everything to do with selling stake without selling control to raise money which goes into their pocket.

    You can expect 2010 prices of 80L (Delhi) to become some astronimical thing in 2020 - pick your number. And your currency and economy will be destroyed in the process.

    Re. Dehradun, I have been there. Very beautiful. Some IT company can easily set up campus there and make prices reach Pune Bangalore levels soon. Also visited Salt lake Kolkata recently, also looks ripe for an ITG invasion and roaring RE prices.

    Cheers, Venkat


    Venky both your posts are thought provoking and i agree to most of the points that u have mentioned.
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