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Coming Property Crash


Coming Property Crash

Last updated: May 5 2009
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  • ssumili
    started a topic Coming Property Crash

    Coming Property Crash

    One persons loss is another persons gain.

    If you have any property for sale, sell it now. Dont be greedy. Else you are in for a big loss.

    Dont buy property now. Wait for 6 months. If things are going down, wait another 6 months. The property rates are going to crash.

    Here are the reasons:
    1.) Builder/Politician nexus has caused the hype.
    2.) The prices of real estate has increased by 3-5 times.
    3.) Supply is more than demand for such premium prices properties.
    4.) Salaries/Cost of material/Labour has not increased in the same ratio.
    5.) There has hardly any improvement in infrastructure.
    6.) No value added. Same traffic jams and trash once you get outside the community.
    7.) Interest rates have gone up. Monthly instalments are becoming impossible for even profesionals. Not everyone is IT-Project leader.
    8.) Stockmarkets have collapsed. DLF stocks has gone down significantly.
    9.) There is liquidity crunch. FIIs have taken the money out to compensate for their losses in US due to sub-prime crisis.
    10.) If you buy a property now, be prepared to stay in it for 5-10 years. You will be lucky if you can find a tenant who can pay 75% of your monthly mortgage. So you will loose 25% every month on interest costs and even more if the property prices go further down!

  • sindhu sati
    Real estate


    When it comes to buying an overseas property, the two most important factors that can make or break your investment efforts relate to finding out the best location and sealing the deal for the lowest possible price. Be it a condo property, or a beachfront villa, a paint house or a serviced apartment market boasts of thousands of properties. The internet directories are the best place to look for the most recent listings.

    The economy of Brazil is currently in the best of health despite the dominoes effect of US recession on the rest of the world. The property prices here are booming. Over the past few years, the property prices in Brazil soared up many times; at some locations property prices even jumped up at the rate of 20% per annum. The cities along the north east coast such as Bahia, Rio and Sao Paulo especially promise you big return for your money.


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  • ks2071746
    Dear friend,

    Nice to read a different perspective.


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  • contra
    Black swan

    There is something called as black swan, the unexpected, which might happen.

    The US based NRIs may actually become distressed buyers of Indian Assets like RE in 2010. Why?

    Gun sales surge in US; we all know who will be first practiceshot



    On a more serious note,
    1. As NRIs get more worried about keeping cash in US banks, we may actually see a surge in remittances to India. The current exchange rate to Rs50 per USD also makes it very favourable to save in India.
    2. Steep drop in Real estate prices in US, protectionism in US job market like preference to locals, increase in crime against indians etc makes it highly unfavourable for NRIs to buy houses or property in US. Sometime in 2010, if situation worsens even more that NRIs are literally liquidated from US, then they need a home back in India to stay. This could bring sudden demand to Indian Metros like Chennai, Bangalore from returning US NRIs in hordes. Again the current exchange rate to Rs50 per USD also makes it very favourable to invest in India.

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  • abk
    To add some more ......

    So, it's not surprising there have been changes of heart by some of the most prominent bears -- people like Doug Kass of Seabreeze Partners and Steve Leuthold of the Leuthold Group -- who both have warmed to stocks in recent months.
    Last week, they were joined by a technician who has one of the best track records in the business. Dan Sullivan, editor of "The Chartist," an advisory service celebrating its 40th anniversary this year, moved on April 14 from 100% cash in his fund portfolio to a 50% recommended exposure to exchange-traded funds or equity mutual funds.
    Sullivan had been all cash since January 2008, saving his subscribers from one of the worst bear markets in history. And his mutual fund letter was number one in the "Hulbert Financial Digest's" rankings of fund letters' performance over the last five years, while "The Chartist" itself is in the top five of all letters over the past 25 years. Both beat the market during those periods.
    So when he changes his mind, it's worth paying attention -- though I'm not quite ready to declare that we've turned a corner.
    Plunging back in
    When I caught up with Sullivan a few weeks ago for a column I wrote during the first week of the rally, he was still skeptical. Yet he expected to see a market bottom or new buy signal in the months ahead.
    But now he's putting at least one foot back in the water. Why? A key technical indicator, the advance-decline ratio, has given its first decisive buy signal since February 1991.
    The advance-decline ratio, Sullivan explains, is a 10-day average of the number of advancing stocks divided by the number of declining stocks on the New York Stock Exchange. Whenever advances topped declines by two to one, he says, the stock market has done significantly better in the months ahead.

    In the 11 times that's happened since 1949, the Dow averaged 7.68% gains over the next three months, a 15.3% advance over the next six months, and a 19.12% rise over the next 12 months (see table). The smallest gain six months later was about 6%, and only once -- in 1987 -- did it decline 12 months out. And we all know what happened that year.
    "It's rare and gives a powerful buy signal over the next three to six months," he said.
    But is it the beginning of a new bull?
    "It could be," he says, although his longer-term indicators haven't kicked in yet. "We're still quite cautious. Eventually we want to be 100% in a group of high relative-strength stocks."
    For now, he says, "we want to be in this market to a limited extent."
    Other advisors are getting more optimistic. Lawrence G. McMillan, president of McMillan Analysis Corp., was bearish when I spoke with him in March. Now he likes what he sees.
    "The equity-only, put-call ratios continue to decline rapidly, and that is bullish," he writes in his newsletter, the "Option Strategist." Put-call is the ratio of bearish to bullish options traders.
    "Could this," McMillan said, "be signaling the start of the next bull market? It's certainly within reason to draw that conclusion

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  • sachin02
    Property crash - some questions

    Very useful thread, got good info, thanks everybody for contribution. I have few concerns/questions, if someone can provide some thoughts that would be helpful.
    I agree with the people here that there is a property bubble (especially in NCR), we bought a place in dwarka in 2003 for 20 lakhs for living. Now i looking for a similar place in the same area initially for investment but also as an option to move in later. The quoted prices for similar properties are around 70 lakhs now. Its totally out of imagination. Even if you account for 10% price increase year on year and give some extra room for appreciation it should be around 40, max 50 lakhs. I have waited since last one year for prices to go down but they havent gone down much. Most of the property dealers (as others have also mentioned) either deny there is any slowdown or give silly reasons to justify that this particular region/sector is isolated from the rest of the economy. Though everyone acknowledges the volume of transaction is reduced and its a buyer's market but still they refuse to acknowledge that it will actually impact prices. Here are some of my questions -
    1. Property dealers usually get 2% commission, higher sales price means more commission, but no sale means no commission at all. If the volume of transactions are low then why are they not blinking and facilitating price reductions rather than supporting high prices resulting in no activity.
    2. Is it possible that if the economy goes down then the government comes for rescue of people who borrowed when interest rates were low and subsidizes refinancing of mortgages (like the US govt is doing currently) and prevent a market correction.
    3. Is there some rough rent/price ratio that can be used as a guide to decide when it makes sense to buy. Rental market in Delhi i guess has less distortions and is more perfect than the property market. Rentals have gone up in much more reasonable fashion in last few years (right ?) compared to property prices, so can we use some rough thumb rule to guess how much are the property prices inflated.

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  • wiseman
    To add some more data ...

    Originally posted by nick_alan_76 View Post
    It's a classic Sucker Rally

    Funny thing is they plan to raise $1T by selling gold (worth ~$12B). In short term this may reduce the Gold price (my buying opportunity). Long term however, Gold is money.


    Some interesting information in general. First, the RBI Guv has just come public saying they are not in favor of printing more money to resolve the Fiscal Deficit. So, its clear that, given the flat to down growth in GDP, its going to be increased taxes that will make up the gap. Can the Govt actually raie taxes in this scenario? In my opinion FD will continue to be high for some time to come and there will be very little leeway for Govt to play in this area to boost the economy.

    Second, Forrester has just told its clients that there may be a good chance the Satyam deal may not go thru at all due to the limitless nature of its liabilities. In parallel, IBM seems to be pulling out of the race. More may start doing it. This will throw spanner in the works for the IT business in general.

    Third, some very influential people - Richard Russell, the guy who has been writing a highly popular Newsletter since 1958 and was the one to call the 1974 bottom correctly - are saying that this is definitely not the bottom for the US Stock Markets.

    This pain will last longer and will get more serious as we go, since we as a nation are eating into savings and starting to edge towards the cliff.

    So, till things turn around, stay away from large and highly leveraged assets - RE - since you are likely to burn your fingers in the short term.


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  • byownermls
    Hi, Every one

    Thanks for the Great information about Real estate business

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  • ks2071746
    Originally posted by ssman View Post
    There is no reason to pay 10% more from todays prices when the same thing will be available next year for 50% less.

    We are at the edge of a cliff. The price drop has just started. There is no concrete reason for prices to rise or even hold stable.

    One year ago - Jan 2008 - the stock market crashed and people thought that was enough. Then Lehman fell and everyone came out with bad news, layoffs and missed targets. Anyone in charge and anyone who is knowledgeable about economics speaks of a recovery only in 2010-2011.

    Real estate is trailing the stock market by about a year, and because its less liquid and less transparent, it moves more slowly. We have seen the beginning of the crash. The real estate version of Lehman is going to happen by the middle of the year (after all, how long will DLF and Unitech keep selling off 300cr in assets to service 5000cr in loans - eventually they will run out of things to sell).
    And when that happens will we see the actual crash in real estate.

    The Sen fell from 20K to 15K - thats where we are in real estate today. The Sen then fell from 15K to 7K - thats where we are headed in real estate tomorrow. It will not happen overnight - the downturn will persist for several years.
    Dear friend,

    What I meant, at the time of buying, one can give a consideration of about 10% for the specific plus points of the project as compared to the other projects in the locality. I did not talk about the buying time either in the bear or bull phase. I have experienced this in my purchase of a 2 bed flat 15 years back at Saidapet and now a larger 3 bed flat in Tambaram. One cannot overlook the specific plus points of a flat in a locality nearer to Railway Station, Bus Terminus, shopping, restaurants etc. apart from good school/hospitals nearby. Take for example, Tambaram area. Flats nearer to Tambaram Rly. Statioin within a KM or near Sanatorium within 500-700 metres are excellent places for own use/living. Even away places like Selayur, Chitlapakkam are considered as Tambaram East and if the flats are say, 2 KM or 3 KM etc. from Rly. Station, are of less convenience overall as compared to places within a KM or so from the Rly. Stations.
    One should also see the ambient surrounding the project and water stagnation issues, good road etc.


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  • nick_alan_76

    Originally posted by wiseman View Post
    squeeze and release
    It's a classic Sucker Rally

    Originally posted by wiseman View Post
    the mere pledging of lots of additional debt and a lot of talk about concerted action by the G20!
    Funny thing is they plan to raise $1T by selling gold (worth ~$12B). In short term this may reduce the Gold price (my buying opportunity). Long term however, Gold is money.

    Leave a comment:

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