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Reality prices to crash...

Last updated: May 25 2009
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    Guest started a topic Reality prices to crash...

    Reality prices to crash...

    The real state boom was empowered by too many +ve factors during the year 2004 - 2008
    1. Cash Inflow from foreign Investers
    2. Home loan interest rates were quite low
    3. Boom in IT Sector
    4. People buying more than one house on loan just for investment purpose even if it was a costly affair.
    5. Many NRI's buying houses in India for investment.
    6. Black money from politicians and other sources going in to reality
    Now all of the above conditions have reversed

    1. Foreign investers taking out money
    2. Interest rates too high
    3. IT Boom some what burst
    4. People who brought more than one home are desperate to sell their 2nd home
    5. NRI's selling their invested houses as they need the money there.
    6. Black money some what already invested and not giving that result. Some more can flow in but it can not change the fate of this industry.
    now all the +ve has become -ve and I see no reason for property rates going 25 - 50% down in another 1 year.

    So the mantra for home buyers is wait and watch policy unless you are getting a very good deal from some NRI or from a person who can not take the heavy interest rate any more.

    And for the ones who want to sell, sell your property even if it did not give u any profit.

  • Sansei
    replied
    Why the time is not ripe to buy a home

    a small article for the bloggers.

    Why the time is not ripe to buy a home



    That the property market has undergone a significant correction is well known. That real estate experts are now talking about prices bottoming out is well known too.
    But, contrary to conventional wisdom, experts are of the view that this may not be the right time to invest in residential property. And, their advice is for both first and second-time home buyers.
    Consider this: A report from PropEquity, a firm that maintains data on real estate, said that in the first quarter of the current financial year, the Mumbai market saw an average correction of 42.84 per cent compared to the corresponding quarter last year.

    According to another report by Centrum Broking on Maharashtra Chamber of Housing Industry's exhibition, prominent developers such as Kalpataru, Lodha, Rustomjee and the Acme Group were quoting prices 20 per cent lower than their card rate six months ago. Godrej Properties had dropped the quoted price of its Mahalaxmi project (Planet Godrej) by 34 per cent.
    Prices in other major metros too have seen a significant correction in the past six months, according to the PropEquity report. These include Gurgaon (24 per cent correction), Chennai (13 per cent) and Hyderabad (10 per cent) for the same time period.
    If prices are lower, then why investment in realty is not advisable?

    "To begin with, the yields of residential properties are low. They are between 3-5 per cent only," says Hitungshu Debnath, executive director, distribution and wealth management, Angel Broking.

    If you take a loan from a bank and expect the rent income to help you pay the equated monthly instalment, you will need to rethink the math, he adds.

    "The rent income along with property appreciation will not be able to cover even the interest that the investor will pay for the home loan in the first few years. This is called as opportunity cost in real estate. To get good returns, the buyer will need to hold on to the property for a long time, probably till the loan is repaid," says a property expert.
    Experts also suggest that property prices are going to remain stable for at least two years, that is, if the correction stops.
    "This is based on the supply that will hit the market in the next three years. An estimated 200 million sq ft a year will be available, considering the properties announced," says Pranay Vakil, chairman, Knight Frank (India).
    Not all the supply will be lapped up by the buyers immediately. This supply also means that the appreciation in the property value will be slow, he adds.
    Powered by ="http://www.business-standard.com/"][/URL]

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  • Sansei
    replied
    Its been interesting read , specially the Wisemans revisited price/rent ratios and methodical commentary

    Once again, would reiterate that unlike stocks, homes r basic need and something has to be added to the equation than just rate of returns!!!

    RE might not depreciate as much as feared.

    Leave a comment:


  • ks2071746
    replied
    Dear friend,

    What you have said above is right.

    ks2071746

    Leave a comment:


  • nick_alan_76
    replied
    Originally posted by warhound View Post
    Hmm... This is interesting because I am currently residing in the US with excess cash flow. I do not see any opportunity without actually relocating to New Delhi besides investing in real estate or doing FD's.

    Is there a third option available without either going RE or FD, legal obviously.
    warhound, my comment was regarding the black money (the likes of which Obama wants to ban in US).

    If you have legit money and need legit ways to invest in India, my suggestion is to carefully look at the investment options. Legit options are dime a dozen. Take a pick from starting a business, investing in partnerships, investing in stocks/bonds, forex, precious metals and many more. Just make sure to read between the lines and fine prints.

    My suggestion would be to first look at your strategy... do you need the money to be in liquid assets or not. Then make all agreements legally. Else there is a high chance you will get burnt.
    Last edited May 6 2009, 08:58 PM.

    Leave a comment:


  • warhound
    replied
    Originally posted by nick_alan_76 View Post
    People who have that kind of money, already know. Plus do not expect anyone to spell it out so openly.

    Hmm... This is interesting because I am currently residing in the US with excess cash flow. I do not see any opportunity without actually relocating to New Delhi besides investing in real estate or doing FD's.

    Is there a third option available without either going RE or FD, legal obviously.

    Leave a comment:


  • replied
    All flats in OMR will have low rental values too because of large supply and low demand.

    Rents will be in the range of just Rs 6 to 7 thousand pm for these kinds of flats

    Leave a comment:


  • ks2071746
    replied
    Originally posted by lovebird View Post
    Even with these reductions, it is not advisable to book in Purvankara. Their windmerie project is cancelled. they started another project purva cosmo without bothering about the first project.

    So no assurance for completion
    Dear friend,

    If there is no assurance of completion with least delay, it is better not to touch the project even at half the price. Apart from the lower rate/sq. ft. one need to consider the large maintanence charge of atleast Rs. 2 per month/sq. ft. which itself will come to Rs. 3220/PM and the rent also may be like this amount only considering that the tenant will have to pay the maintanence charge?

    ks2071746

    Leave a comment:


  • replied
    Originally posted by wiseman View Post
    An interesting Ad in today's (18th April) papers by Puravankara:

    Limited offer only!

    1. Flat area raised from 1450 to 1610 SqFt - a 11% increase

    2. Flat price reduced from 64L - 48L - a full 25% reduction in one shot!!!

    3. Car Parking included Free - can we add 1 to 2 L for this?

    4. Club Membership included Free - how much can we add for this?

    Even without monetising 3 and 4, we are seeing a reduction of 32.5%. And this is without negotiation.

    Good thing for Puravankara that this is a limited offer. If it were unlimited, they would go out of business soon! Not that they surely will not even at this stage, going by the way the market is headed!!!

    I have nothing against Purva. But a lot of builders are headed that way. Purva has the guts/desperation to drop before they are forced to.

    cheers
    Even with these reductions, it is not advisable to book in Purvankara. Their windmerie project is cancelled. thye started another project purva cosmo without bothering about the first project.

    So no assurance for completion

    Leave a comment:


  • ks2071746
    replied
    Originally posted by abk View Post
    The famous stock trader Jesse Livermore said years ago that there are only two emotions in the market: hope and fear. The problem is, people hope when they should fear, and fear when they should hope.
    Dear friend,

    It is quite true. Most people, mainly small investors, tend to sell when their shares are going down fearing further fall. They refrain from selling their shares when the prices go up hoping further increases. Ultimately they only either lose or do not get the gain.

    ks2071746

    Leave a comment:

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