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- By supply-demand logic, it should crash. In-fat, should have crashed already in last one year. But the problem with Indian market is: black money and cash transactions, which makes it attractive for builders to keep holding on to stock without liquidating at lower prices. They just don't understand the time value of money. If they have to wait on an average for 6 months to sell at their last price, they're better off selling now at 5% discount to that, but they'll keep waiting - 6 months, 12 months...
Moreover, the Indian banking system cannot afford more NPAs, especially from a sector as huge as real estate. In my opinion, what will happen in near future is only a minor reduction in notional prices, if at all. But overall, lower cost of house acquisition by additional policies like lowering of GST/ stamp duty, and further reduction in interest rates - either directly or indirectly, through increased IT rebate, etc.
I don't see that helping much and then there would be a full blown crisis, the only solution to which would be drastic drop in currency/ assets or a prolonged painful period in one way or the other - stagflation or recession. When that would happen - depends on lots of factors, how policies pan out, but sooner or later, it's bound to happen. Earlier would be less painful, delay would make it worse. But human nature is to delay till it becomes inevitable.
Real estate, will not be a decent investment option again for several years. The boom of last couple of decades was fuelled more by black money than the actual demand like it was for western countries, and the current generation will be paying the price for that crime.CommentQuote1Flag