Announcement

Collapse
No announcement yet.

RE Bubble Won't Burst....

Collapse
X
Collapse

RE Bubble Won't Burst....

Last updated: July 18 2013
21 | Posts
3103 | Views
  • Time
  • Show
Clear All
new posts

  • RE Bubble Won't Burst....

    Dear Friends,

    In my opinion, the RE bubble won't burst in India in near future because of following reasons,

    1) Increasing population in tier I, II & III cities
    2) Income levels are increasing
    3) Shortage of land in the heart of cities (small or big)
    4) House is the basic need of every individual and everybody dreams of owning at least one (!) house.
    5) Continuous increasing cost of land, building material and labour

    I agree that during reccessional period housing or land prices are stagnant or come down. But they do not come down in proportion of increasing trend ! e.g. Prices in Pune were increasing almost by Rs.100 to Rs. 200 psf per month according to area in 2010 to 2011 but when reccession hit in 2011-12, the prices are almost stagnant in some areas and in some areas those have come down by only Rs. 100 or max Rs. 200 psf since 2011. And in 2013 those are again on rising trend.... I was also awaiting / expecting major fall in prices when I was looking for home in 2010 to 2011 but finally I booked home at Rs. 3400/- psf 3BHK in Ravet in July 2012 and today the final building in the same scheme is being quoted at Rs.5000/- psf.

    How much do you think the builder will negotiate? Rs.100 or max Rs.200/- psf but still it will be Rs.1400/- above the rate , I have booked. This is the condition of todays RE in India in such hard times...! when jobs are not secured and economy is at its lowest... Builder has booked almost all the flats (only 3-4 are remaining before the building gets completed).
    My honest advise....if you are planning to book flat/land , please do it whenever you are having sufficient funds. Don't wait for bubble to burst ! because it will never (and never to your expectations!).
  • #2

    #2

    Re : RE Bubble Won't Burst....

    5000 in Ravet? which builder? is it true? what is rate then in Baner / Balewadi / Wakad and in Aundh?

    I believe Nandan has launched a project in Aundh...anyone knows the rate?

    Comment

    • #3

      #3

      Re : RE Bubble Won't Burst....

      Hey dont worry about economics, its never based on fundamentals in India be it real estate or stocks.....look at MF performance of last 5 years.

      Ravet at 5000 does not justify at all. When wakad was 4000 in 2009-10, it had all it takes to habitat, what does Ravet have today to command this price? take things form your mirror.

      Comment

      • #4

        #4

        Re : RE Bubble Won't Burst....

        The question is not when the bubble will burst, but whether at all there is bubble in Indian RE

        Comment

        • #5

          #5

          Re : RE Bubble Won't Burst....

          Originally posted by McLordGanj View Post
          The question is not when the bubble will burst, but whether at all there is bubble in Indian RE
          hats off to you...when each and every person you'd talk around would cry about 'bubble' i found only you who doubts whether there is bubble or not...

          Comment

          • #6

            #6

            Re : RE Bubble Won't Burst....

            Hi Raj,
            Formation of bubble and burst is not a negative thing if you consider long run. Recession or bubble burst is a necessary and cyclic events for any economy. You can see to any past recession or burst, how it helped economy. every burst or recession always followed bull run. This event only removes/heals weaker parts of economy.

            1) Increasing population in tier I, II & III cities
            [Pravanjan] yes population is increasing, but not buyers.
            2) Income levels are increasing
            [Pravanjan] increasing?? when? how? have you consider inflation?? GDP growth is only 5, CPI inflation is 9+ and food inflation which affects most middle class is double digits. So, yes the income numbers is increasing, but buying capacity decreasing.
            3) Shortage of land in the heart of cities (small or big)
            [Pravanjan] take the case of Japan, whose population density is same as India and it's middle class population is much richer than Indian middle class. Also, there interest rate much lower than Indian. But, still they had a very bad real estate bubble burst.
            4) House is the basic need of every individual and everybody dreams of owning at least one (!) house.
            [Pravanjan] yes. it is basic need and every human being in this world has a dream house in his mind. But, how many of them can afford that it is a question. India needs affordable house, not house for higher middle class or rich class(most of housing projects are 50+ Lakh).
            5) Continuous increasing cost of land, building material and labor
            [Pravanjan] WPI figure is below 5%.... this doesn't justify the double digit price hikes.

            "Recession or bubble burst can be delayed, but it can't be avoided."
            This was delayed in 2009 by govt intervention. So, this burst is due. This time govt refused to help RE players as they didn't keep their words of building affordable houses.

            But, don't worry about burst. If a project's quality is good, then it will sustain any burst. So, invest wisely.


            Originally posted by RajD123 View Post
            Dear Friends,

            In my opinion, the RE bubble won't burst in India in near future because of following reasons,

            1) Increasing population in tier I, II & III cities
            2) Income levels are increasing
            3) Shortage of land in the heart of cities (small or big)
            4) House is the basic need of every individual and everybody dreams of owning at least one (!) house.
            5) Continuous increasing cost of land, building material and labour

            I agree that during reccessional period housing or land prices are stagnant or come down. But they do not come down in proportion of increasing trend ! e.g. Prices in Pune were increasing almost by Rs.100 to Rs. 200 psf per month according to area in 2010 to 2011 but when reccession hit in 2011-12, the prices are almost stagnant in some areas and in some areas those have come down by only Rs. 100 or max Rs. 200 psf since 2011. And in 2013 those are again on rising trend.... I was also awaiting / expecting major fall in prices when I was looking for home in 2010 to 2011 but finally I booked home at Rs. 3400/- psf 3BHK in Ravet in July 2012 and today the final building in the same scheme is being quoted at Rs.5000/- psf.

            How much do you think the builder will negotiate? Rs.100 or max Rs.200/- psf but still it will be Rs.1400/- above the rate , I have booked. This is the condition of todays RE in India in such hard times...! when jobs are not secured and economy is at its lowest... Builder has booked almost all the flats (only 3-4 are remaining before the building gets completed).
            My honest advise....if you are planning to book flat/land , please do it whenever you are having sufficient funds. Don't wait for bubble to burst ! because it will never (and never to your expectations!).

            Comment

            • #7

              #7

              Re : RE Bubble Won't Burst....

              Dear Pravanjan,

              I agree with you. But as a ordinary Indian citizen , I can see that housing prices are on continuos rise. If you take period from 1995 to 2000 or 2000 to 2005,.....till date , you will see the price of any house has gone up. Even if you summarise the periods 1995 to 2005 and 2005 to 2013; the housing prices have gone up like anything. Yes there were reccession periods like 1998, 2008, 2011 but the overall picture remain unchanged for rising prices...! People say bubble will burst - my question is how big bubble people imagine ?If they say Rs. 6000 psf rate will come down to Rs. 3000 psf ? I doubt... it will never happen in India like it happened in America few years ago. Max from Rs.6000 psf rate it may come down to Rs. 5500 psf. Will you like to call it bubble ?....

              Comment

              • #8

                #8

                Re : RE Bubble Won't Burst....

                What exactly is the point of this thread? If you are thinking of RE as investment, then it is definitely a BIG NO ! RE should not be considered as an investment at this point. You have better secure avenues to invest your money and earn better returns on an annual basis.

                And if you are thinking of RE as a place to stay, then you don't worry about any bubble burst.

                Comment

                • #9

                  #9

                  Re : RE Bubble Won't Burst....

                  Why do we feel that RE for investment is a big no - anything that is limited will gain value and appreciate. RE is the right location will yield rentals and moderate appreciation. Rentals are more of sustainance and will not be comparable to the FDs, Commercial rates; however will increase marginally with inflation increase.

                  The mistake is when one buys in god foresaken place or with bad builder or problematic project and then risk their investment - this is not RE failing but the project/location failing.

                  With increasing population and limited land - RE has to appreciate even if we knock off any %age of the current price we feel is over weight.

                  Comment

                  • #10

                    #10

                    Re : RE Bubble Won't Burst....

                    Its a very bad time to get into RE

                    Wait for at least till Jan,14...market will be at its peak pessimism before election....try buying then

                    Comment

                    Have any questions or thoughts about this?
                    Working...
                    X