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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 anandv View Post
    The real story why Marathwada prices have corrected is that late Vilasrao Deshmukh and Ashok Chavan are not in driver's seat.
    When these 2 guys became the CMs, people in Nanded and Latur thought that they will get industry to these 2 places and hence the prices rose by leaps and bounds.

    Ab Prithviraj ji ka jamana aa gaya and industries never went to Latur/Nanded. So prices ab apni auukat pe aa gaye.
    Even when Mr Deshmukh and Chavan were CMs the industry influx was almost nill in this area (barring some small scale industry). So, people anyways never banking upon new industry coming to their cities. The fact is everything is heavliy dependent upon agriculture in this area and when there is any impact; it's propagated everywhere.

    The prices have gone down in Jalna, Aurangabad district as well (with no CM effect present). The prices started falling/stagnating even before demise of Mr. Deshmukh.

    These markets have become highly illiquid and hence the correction and pessimism. Also, note that people don't buy with "white" in this area. The white component is minimum. So, even "Black" theory is not working here.

    The conclusion is RE prices can fall in India too and when they fall there can be a free fall depending upon the sentiments. Just like one can't predict how much high the prices will go when they start going up, similarly the fall can't be predicted.

    Comment


    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Originally posted by abc111 View Post
      I was just suggesting that capacity and capability of the engine should be checked thoroughly before embarking upon a long long journey.
      Otherwise the engine may break down in the middle.

      Every sensible buyer should keep these thing in mind-:

      1. Loan amount should not be greater than 50% of the asset price.
      2. Loan tenure should not be greater than 10-12 years.
      There are pros and cons of every approach. Your suggested way is more safe. At the same time, it is more risky on the price front. Trying to satisfy this criteria would mean delaying house purchase decision by several years, which can prove very costly if a bull run happens in the period of delay.

      e.g., I booked a flat costing 48L, 2 years back. If I were to accumulate the 50% amount before buying, I would have needed 24L with me. I had only 5. So I was short by 19L. So I would have kept saving in FD/RD. I would have 16L today, if I had not purchased. But the flat now costs 80L. So I need 40L. This means I would be short by 24L now.

      Comment


      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Originally posted by abc111 View Post
        Suppose someone has taken a loan of 30 lacs at an interest rate of 11%.

        If the loan tenure is 10 years ;interest paid to the bank is 19 lacs.
        If the loan tenure is 20 years ; interest paid to the bank is 44 lacs.

        Most of the EMI in initial years go towards interest payment in the case of 20 year loan.

        This 44-19=25 lacs savings could have been used to arrange for other financial goals like pension corpus,children education-marriage,medical emergency etc.

        People have become complacent about this over leveraging because of two reasons -:
        i) Property prices rose by 10-20% annually in the last decade; so the stretching out decision was justified.
        ii) Pay increased by 10-20% annually; so EMIs beacme easy to manage with time.

        But in the present uncertain environment and slowdown across industry;
        Does it make sense to put all eggs in the same basket; extinguish all savings to buy a pigeon hole?
        I am not advocating buying a house in present situation (neither suggesting not to do so). The talk started from the first post in this thread, which was written at a time which was a great one to buy property.

        Even in present situation, I don't think anyone can bet against prices increasing 10% YoY. It may or may not happen. If prices and incomes both do not increase this much, then the rents would start pinching a lot more, coz the house owners want a 10% hike in rent every 11 months.

        Comment


        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Originally posted by manojsti View Post
          I appreciate your opinions:

          1. We just have to be content. Even if you could afford Audi Q7, you wont guarantee your wife would be 100% happy. Then may be you would feel to have driver. Then may be a bungalow. etc etc etc...endless needs.

          2. For the UPSC: We human beings try to be safe.
          remember : Even avoiding small riks could be a BIG risk too!
          In that case one certainly wouldn't feel safe

          Comment


          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            If it is made mandatory to contribute 50% from the pocket if looking for a home, I believe the property rates will correct by 15-20% to the least. Or there will he a hell count of unsold properties with the builders. Also investors will try to find some other investment option than RE.

            Comment


            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Originally posted by abc111
              Suppose someone has taken a loan of 30 lacs at an interest rate of 11%.

              If the loan tenure is 10 years ;interest paid to the bank is 19 lacs.
              If the loan tenure is 20 years ; interest paid to the bank is 44 lacs.

              Most of the EMI in initial years go towards interest payment in the case of 20 year loan.

              This 44-19=25 lacs savings could have been used to arrange for other financial goals like pension corpus,children education-marriage,medical emergency etc.

              People have become complacent about this over leveraging because of two reasons -:
              i) Property prices rose by 10-20% annually in the last decade; so the stretching out decision was justified.
              ii) Pay increased by 10-20% annually; so EMIs beacme easy to manage with time.

              But in the present uncertain environment and slowdown across industry;
              Does it make sense to put all eggs in the same basket; extinguish all savings to buy a pigeon hole?
              Originally posted by fatichar
              There are pros and cons of every approach. Your suggested way is more safe. At the same time, it is more risky on the price front. Trying to satisfy this criteria would mean delaying house purchase decision by several years, which can prove very costly if a bull run happens in the period of delay.

              e.g., I booked a flat costing 48L, 2 years back. If I were to accumulate the 50% amount before buying, I would have needed 24L with me. I had only 5. So I was short by 19L. So I would have kept saving in FD/RD. I would have 16L today, if I had not purchased. But the flat now costs 80L. So I need 40L. This means I would be short by 24L now.
              fatichar,
              Your logic worked a bit coz as abc111 pointed out that bail-out was done by the banks. Hence, the prices rose more than what they should have. In reality, in absence of bail-out, your returns as of now would have been negative !! Everyday is not a bull day & RE prices don't always go up. Had this been the case, everyone would have become become investor in RE & all businessman would have been builders. There would have been Infy Realty, Wipro Housing etc. as well .

              Just wait for another year, adjust inflation alongwith correction in prices, you will see the real returns.
              If you are happy, you are successful.

              Comment


              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Originally posted by realpune
                Recently, i visited Marathwada region within Maharashtra to attend a family function.

                Came to know that property prices have corrected by 30-50%, still there are no buyers. Please note that this is seen only within this region. In Vidarbha prices have stagnated for last quarter which were going up quite fast earlier.
                Those who are familiar with Nagpur, must be knowing about MIHAN. Many people speculated on this, bought lands, sold, repurchased etc. & the situation now is so bad that these very INVESTORS who bought land thinking they would make double digit profits YoY have committed suicides. Just go to Nagpur & you will know the plight of investors & builders who targeted this area.

                realpune,

                I feel Pune buyers are quite ill-exposed to what is happening outside Pune or maybe as reports states that 55% of flats are being held by investors. I know a guy who invested in DSK project at Punawale in pre-launch (2nd flat). He booked flat for self use in 2008, works at Hinjewadi (his wife is also in IT) & last month when builder demanded VAT of some 65k for his self use flat, he was applying for top-up loan. If this is the case, just minor short in finances of these guys will lead to havoc.
                If you are happy, you are successful.

                Comment


                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  Originally posted by manojsti
                  I appreciate your opinions:

                  1. We just have to be content. Even if you could afford Audi Q7, you wont guarantee your wife would be 100% happy. Then may be you would feel to have driver. Then may be a bungalow. etc etc etc...endless needs.

                  2. For the UPSC: We human beings try to be safe.
                  remember : Even avoiding small riks could be a BIG risk too!
                  First, let me clarify, no personal comments against you or fatichar. Following are my thoughts, sorry if you get hurt.

                  I didn't ask anyone to buy Q7 or Rangie, but a car which will protect your wife from horrible traffic & roads in the city. It can be as simple as buying a Wagon-R or something this sort. Whats the use of investments if your own family members are not secured ??
                  Audi Q7 can be a WANT but something like Wagon-R is surely a NEED, especially when you can afford about 40k EMI.

                  As far as UPSC is concerned, I don't know what you meant by being safe. Was it safety to life or safety to job. I personally dropped it coz I can't tolerate saluting to some cheap minister who is looting the country . Also, not taking bribes means I won't get promotions despite merit, nor any good posting either. You know there are rates for location, posts, time period etc. apart from jugaaad.
                  If you are happy, you are successful.

                  Comment


                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    Pune RE Updates

                    Came to know that a builder in Kondhwa (if I am right, its H & M) is giving car free with a flat. Man, I don't know why builders straight-way declare 10% discount than giving free car ?

                    Apart from this, following are inputs about Pune RE :-

                    > Kunal Belleza, Bavdhan looks completed halted. No work, no workers seen regularly. Builder has put up big flex on this under-constro property stating, 2,3 BR flats for sale with contacts details given;

                    > Grand Stand on NH4 bypass work is almost stagnant. Progress very, very slow;

                    > Viva Swaraj Hallmark, Bavdhan phase2 too is not seeing much progress,

                    > Sun universe by mittal at Narhe, was to be completed by this year. Forget about ph2 completion, even ph1 possession, that too of 7 storey buildings has not yet been given,

                    > Valencia heights, mhalunge road, Balewadi has delayed the launch of ph2 of their project. Ph1 is already delayed,

                    > Paranjape Yuthika, still stuck in some legal issues has postponed the possession despite not officially,

                    > Marvel cascada, Balewadi is still waiting for buyers. Got very poor response,

                    > Sales are very poor across the townships, be it NC, Amanora, BR. No new investors jumping in & end users merely watching,

                    > Darode-Jog Serene County work is almost to standstill.

                    Man, rather than just believing what CREDAI & their paid newspapers like TOI says, just look around, collect info from agents & you will see the real state of RE. The sales dipping by over 80% this festive season should be an eye-opener.
                    If you are happy, you are successful.

                    Comment


                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Price appreciation in housing segment slowed in 2012

                      The price appreciation in the housing segment slowed significantly during 2012 in the top seven cities of the country with average capital value rising by only 1-3 per cent, property consultant Jones Lang LaSalle (JLL) India said today.

                      These cities are Delhi-NCR, Mumbai, Kolkata, Chennai, Hyderabad, Bangalore and Pune.

                      http://www.financialexpress.com/news...2012/1039817/0

                      >> Now what does 1-3% hike in property rates on paper show ? Its anyone for guess !!

                      http://www.financialexpress.com/news...2012/1039817/0
                      If you are happy, you are successful.

                      Comment

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