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Has it begin?

Last updated: April 5 2013
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  • Has it begin?

    Car sales crash first time in 10 years - The Times of India

    is it sign of future turmoil..will it effect RE...

    Appreciate your thought
  • #2

    #2

    Re : Has it begin?

    RE Crash

    The economic situation may not be good and some sectors are more badly affected. But some sectors have specific reason for problems.
    I don't believe that RE will be affected to that extent. Slowdown in price rise, oversupply of flats may be there.
    Flats are tangible assets with utility value and give psychological satisfaction to buyer. Secure feeling also comes up when you own a flat/place of residence. It can generate a stream of income.
    Cars also are utilitarian assets, but have declining value over period of use. You can live without a car, while a house falls in essential category(Can Rent).Car will generate a stream of expenditure-Petrol/diesel/repairs and net outflow and for some a sense of happiness and freedom. No dependence on public transport etc.
    It is premature to think of collapse of RE right now. Turmoil yes,dificulty yes, but no crash/bust.

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    • #3

      #3

      Re : Has it begin?

      Car and Home cannot be compared.
      Its a big mistake.
      Don't compare to Oranges.

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      • #4

        #4

        Re : Has it begin?

        Falling car sales indicate economical slowdown. Car and houses are the biggest expenditures of young families (if you exclude health issues of self and parents), and are closely interrelated.

        If car sales continue to fall, it will be safe to assume that RE prices will be affected.
        Yes, there will not be a crash or bust but number of sales falling, followed by price stagnation, followed by multi year melt.

        Personally, I don't see any of the above happening and its likely that car sales will pick up soon...in a couple of quarters.

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        • #5

          #5

          Re : Has it begin?

          People are giving up every luxury to own a home or to procure some down payment for home... This is why car sales are down...and other investment avenues are also drying up because everything is flowing towards RE ...Finance ministry has taken a serious note of this point...
          Alcohol doesn't solve any problem...but neither does the milk.

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          • #6

            #6

            Re : Has it begin?

            Its because of the high petrol price and low salary for the new joinees.... those with high salary are still purchasing cars...

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            • #7

              #7

              Re : Has it begin?

              In worst case, car companies will start giving discounts if sell is hampered. But, same will not the scenario with RE. Builders have strength to hold on prices.

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              • #8

                #8

                Re : Has it begin?

                Originally posted by dhankool View Post
                In worst case, car companies will start giving discounts if sell is hampered. But, same will not the scenario with RE. Builders have strength to hold on prices.
                If Builder's have so much strength; then why HDIL is not able to repay its debts.

                Why some builders are picking money from market at 2% per month?

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                • #9

                  #9

                  Re : Has it begin?

                  Thanks,
                  Car Sales are 24% sales down, this is huge number.
                  this does indicate spending power of people is going down..there would be impact to RE but not sure about the intensity of impact..too small to be ignore or too Big to never forget...
                  again time will answer this
                  Last edited April 4 2013, 12:23 AM.

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                  • #10

                    #10

                    Re : Has it begin?

                    Originally posted by abc111 View Post
                    If Builder's have so much strength; then why HDIL is not able to repay its debts.

                    Why some builders are picking money from market at 2% per month?
                    The point here is in spite of being in debt, builders are still able to raise money. But their sources are drying up... the domestic investors (including banks) in RE are already deep in NPAs and private lenders are charging high.

                    Some builders with good political connections are able to raise money while some cannot.

                    As more and more builders will face the cash crunch, the effect will be more.

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