Dear all,

-Prices of diesel, petrol and cooking are about to rise.
-Prices of all commodities are going to rise day by day.
-Monsoon was below normal in most of the parts of country.
-Congress govt (as in full majority) will dare to rise the prices of steel and cement.

What will be its impact of RE?

Definite rise or RE bubble will burst as people will find it difficult to cope with rising commodity prices.
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  • Thanks Wise. Will keep in mind.
  • single digit margins

    Originally Posted by wiseman
    I will not talk about your 15% down since the words RE and down cannot appear together again! But about your connecting inflation and Re price rise is not necessarily always true.

    Inflation can be caused by any one of 2 things. Too much money printed and circulated (this is the critical factor) to the population by way of higher wages or credit availability, causes prices to rise, meaning people armed with more money (either by way of constantly rising salaries or easy loan availability).

    In the 90s and more importantly the noughties (2000s), this happened in a big manner which led to RE prices too rising.

    There is another way inflation strikes. When wages stay flat or rise sluggishly (like today) and supply declines, prices rise too. But this price rise is generally restricted to essentials like food, fuel. Though Makaan is also an essential, unless people are able to generate enough surplus from their alary AND also get a large loan to cover higher RE prices, there is no way RE prices can keep rising as people will stop buying due to prices simply going out of reach.

    This is what seems to be happening since 2008 and - since credit all over the world is contracting rapidly - and wage rise too seem to be flat (even a 9% raise over 2 years, like Wipro is planning to give, is not really a wage rise as overall inflation is far higher indicating that your today's salary is actually lesser than 2007 salaries in real purchasing power terms). To give you unimpeachable evidence of this sluggishness in price rise (due to deflation), even God's Gift to mankind (the one and only property that Almighty keeps bringing to market but always keeps it tantalisingly just out of reach from the common man), in the example given by him has risen under 2% between 2008 and 2010 (2 whole years!).

    Under these conditions, though builders will try to raise the quotations of property (and even some people will fall for it and buy at these high levels), overall demand growth will not be strong and healthy leading to sustained price increases over the years.

    Time will tell over next 3-5 years if this will happen.

    And btw, I'm not saying a word about the sustained weakness in stock markets in the last week (due to fears raised about Sovereign Debt crisis building up in EU) which is a precursor to the upcoming sentiment change in the Indian Investor shortly (not yet, but its rapidly weakening and anothe few weeks of overall declines will have the raging bull of 2009 running for cover!). But I'm not saying anything about how it will affect RE in 2010!


    very rightly said wiseman

    the 8 million jobless US citizen bucket will take 3 - 4 years to get absorbed even if the US economy keeps growing at current pace.

    Europe is in poor state .....

    India growth driver .... who ??? well its really the farmers who produce something and the mining.... rest all depends on world economy ... so if industrial production increases how does it matter ... just the inventory will increase ...

    Indians are a bit conservative in spending ...
    they save more ....
    and credit card transactions are at all time low....
    why many cards are giving flat 10 % cash back ????

    daily you find the paper with promotion of 50% flat ....
    even hotels are reducing the rentals....
    Malls are giving wonderful schemes .... every weekend .... any reason why .... just to get sales....
    all electronics is available at dirt cheap rates .....

    All are operating on single digit margins
    many commercial RE shops and malls are finding hard to sustain ....

    Service sector is just sustaining the slowdown....

    once the stimulus packages disappear things will again be March 09 level.

    Only anomaly is Residential RE of Pune .... won't take much time for the smoke to clear ....
    and that will screw Builders big time .....
    Govt banks have reduced giving loans to builders ...
    from 40+ % the loan growth has reduced to 15%....
  • But frugal, hotels are raising rates - at least Leela kempinsky 5 star rates are up.
  • frugy takes only that data, where things are falling :D
  • Originally Posted by aditi sharma
    Govt planning to tax diesel cars
    Thanks for this link Aditi. Yet, I personally believe that only the cars in 5-10L bracket will be affected by this, I don't think that anyone buying a car 15L or more will think twice before shelling out 80k as tax. What's more, cars like Merc diesel are already cheaper than petrol siblings. Eg. The E350 petrol & E 350 Bluefficiency Diesel (both W212 models) have a price difference of almost 1.65L, hence another 80k will still mean that diesel car will be cheaper by around 85-90k!! What's more, this diesel Merc gives milege of almost 17.8km/litre on highways....excellent for a beast like that.

    My personal use is more on highways, mostly for inter-city travel & in many pumps, petrol is unavailable too:(!! This 80k will be recovered under 1.5 years in any case, but yes if you are going to use for city use, better then stick to petrol. My friend has Skoda Laura diesel & has recovered the price difference in less than 2 years!! However, if you want to keep the car for 5 years or more, diesel is not advisable.

    Originally Posted by enduser
    Aaji electric kaho electric

    Yep, but there are 4 issues:-

      Man, how will one charge the car if one stays in a flat? Have extension from say 10th floor to parking?
      Cost of replacement of batteries:- This is very high as of now & in reality negates the effect of savings by not using gasoline.
      There needs to continuous supply of electricty. What if I need to charge on Thursdays?
      Range issues:- I can't travel to Mumbai & back in single charge. It is good only for buying groceries & aata from chakki:D.
      Hey, for time being I felt I was on auto forum.Hey, for time being I felt I was on auto forum.Hey, for time being I felt I was on auto forum.Hey, for time being I felt I was on auto forum.Hey, for time being I felt I was on auto forum.Hey, for time being I felt I was on auto forum.Hey, for time being I felt I was on auto forum.Hey, for time being I felt I was on auto forum.Hey, for time being I felt I was on auto forum.Hey, for time being I felt I was on auto forum.
  • Originally Posted by Venkytalks
    But frugal, hotels are raising rates - at least Leela kempinsky 5 star rates are up.

    Due to high RE rates, people are staying in hotel as it still remains cheaper than EMIs, hence as there exists shortage of rooms & the prices go up:D & maybe there are services provided here like that seen in Pride Platinum ads:p.
  • CommentQuote
  • budget predictions by TOI

    AUTO | Excise duty hike likely by 2-4% from the current 8%
    Banking & Finance |
    Govt may infuse capital into PSU banks. But overall Budget is expected to be negative due to concerns of fiscal deficit
    CEMENT | Continued spending on infrastructure would be beneficial for cement companies; any increase in tax incentives for residential properties would also be beneficial
    INFRASTRUCTURE | Allocation may be increased for areas like irrigation and roads; steps likely to ease the process of accessing capital for the sector
    Expected extension of fiscal benefits under the STPI (10A/10B) scheme by 3-5 years to boost investment in the Tier-II and Tier-III cities, which are unable to avail the benefits of SEZs
    OIL & GAS | More clarity on the tax break from the natural gas produced under NELP I-VII. Measures could be taken on the recommendations of the Kirit Parikh committee, which has advised deregulation of fuel prices POWER | Exemption under section 80-IA, currently available only till FY2011, may be extended
    STEEL | Export duty on iron ore may be hiked, benefiting steel firms purchasing ore from the open market; but such a move will hit mining companies. Excise duty on metal products is likely to go up from 8% to 10%
    TELECOM | A uniform tax structure that would help lowering the tariffs is expected; move crucial for the next leg of growth in rural India
    PHARMA |
    Allocation for healthcare spending may be hiked. The government may increase the weighted deduction on R&D expenditure from the current 150% to 200%, and extend the tenure of deduction for the next 10 years
    FERTILIZER | Last year’s promise of revamping the complex subsidy regime to the nutrient-based one won’t be met OIL SUBSIDY | Recasting subsidies on petroleum products, particularly kerosene and cooking gas, may be postponed as any increase in prices would add to inflationary fire
    FOOD | The finance ministry is looking to replace the public distribution system with food coupons, which can be used to buy food items from the open market
    MUTUAL FUNDS | Sebi has proposed scrapping tax benefits for corporates investing in mutual funds. If implemented, it would increase the corporate tax outgo, closing the arbitrage. It would be a major negative for the equity market and the mutual fund industry
    INCOME TAX | Income tax exemption limit can be raised a little to give relief to the middle class
    SERVICE TAX | May be restored to 12% while excise duty could be increased marginally CORPORATE TAX | Govt may not tinker with corporate tax rates despite pressure from the industry
    INDIRECT TAXES | The rollback of excise duty is likely to be mildest and selective, with focus on sectors that have seen strong demand growth. Custom tariff rollbacks may be more broad-based
    TEMPORARY TAX/CESS | New temporary tax/cess may be introduced to fund government’s large and persisting social sector spending
    DIVESTMENT | Expect disinvestments of Rs 300-400 billion in FY11 — Coal India, Hindustan Copper, SAIL and BSNL are some of the candidates
    EXCISE DUTY | May be increased by 2% to 10% and brought in line with service tax rate to help smoothen transition to GST
    INSURANCE | FDI limit may be hiked to 49% from 26%
  • Originally Posted by razer
    2 BHK, 20L? Unfortunately, you'll struggle to get such deals even in Nashik.

    If I got any of the above, I can actually retire! :D

    Boss...Have you checked? or Are you writting it JUST?
    I think there are lots of deals below 20L in Nashik.
    Of course that depends on area but still...on an average, below 20L deal is most possible in Nashik.
  • Direct tax bill

    can someone post regarding direct tax bill. i heard its getting implemented from FY 2011 and the home loans interest exemptio will be withdrawn due to that. Request the guys having information to post it in details.
  • Yes. There is proposal to remove all such rebates and rather simply the structure by plainly increasing the second slab of cnome tab. So people having income between 1.6 L and 10L have to pay only 10% tax. In place of that we can forget about deductions inform of traval allowance, House Rent allowance, deduction of prin/interest from taxable income etc. AT teh same time th notion of Short term capital gain and long term capital gain will go. There will be only one rate for both gains.

    However I believe the 80CC deductions will still continue.
  • some of the clauses of proposed direct tax code:

    1) annual premium of policy should be 5% maximum of sum assured. means the policies having premium paying term 20 years minimum.

    2) the maturity amount of PPF / EPF/ policies is likely to be taxable in direct tax code.

    3) tax benefit on housing loan of restricted to principal amount paid only. not interest amount.

    so kinldy do some calculations before home/ policy purchase.
  • Thanks for the info friends.
    Originally Posted by compuwalah
    However I believe the 80CC deductions will still continue.

    Yep, it will. Some are also advocating the limit be raised from current 1L/anum to 5L/annum or simply it should be some %age of the total earnings. Let's see what happens. One thing which I see is that corporate tax may not be reduced:( & perhaps service tax maybe hiked back to previuos levels of 12.2% from current 10.2%. So, pay more for bills etc.
    The best part:- Excess liquidity will be taken out from the market as fiscal deficit control is of prime concern for the Govt. Expect deposit rates to go up, good for those who are saving:).
  • New income tax slabs

    income to 1.6 L nil,
    1.6L to 5 lakh, 10%,
    5 to 8 lakh 20%,
    8L to Above, 30%

    Cars, Cement, Cigarettes, Petrol and Diesel to be COSTLY
  • Originally Posted by aditi sharma
    income to 1.6 L nil,
    1.6L to 5 lakh, 10%,
    5 to 8 lakh 20%,
    8L to Above, 30%

    Does it mean that the potential saving now will be used by the builders to increase rates. :(

    Somthing like Increase in Rate = (Tax Savings * 15 years)/ area of flat.