There are numerous articles and news on price reduction in market or likely market crash. Without doubt, in the current scenario, several builders are offering discounts. Should one buy at these discounted prices or should one wait for the prices to crash further is a big question!!!

Given the fact that a project that is being sold at a discounted price or is likely to be a sold at discounted price, will the project reach satisfactory completion? Do you see that price reduction will directly impact the construction quality - comprise by use of lower cost material?

Will it be safer to invest in a high value (no price reduction/least price reduction) properties than in one that is discounted (and may never see completion or will be of inferior construction quality)? Ram, WiseMan, John, Rex, Diwakar, Rashim and all of you, what do you say?

Regards,

Manoj
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  • 20 years is along time

    Originally Posted by wiseman
    Manoj,

    I did some calculations relating to the future to scare the readers on this post under "uninhibited exuberance".

    To sum up, if you buy at 2.4 crores per ground and hope for a 25% CAGR over next 20 years (some geniuses do believe it and espouse it on this forum to palm off their property to the unwary!), you need to find a buyer at 104 crores for 1200 Sft and this amount at 35% pa shoots up to 485 crores.

    I dont agree on assuming somethings cannot happen in 20 years

    consider this
    3 years back land at many places in orgadam,sripermbundur was 1000/cent,I ridiculed the broker that these are jungles and i might never find a buyer at these places. today the same places are commanding prices of 150000-200000 per cent.
    if something like this can happen in 3 years same things can happen in 20 yrs.
    you just cannot ridicule it (as i did 3 yrs back)
    AND IF EVERY PREDICTIONS BASED ON STATS AND ESTIMATES WHERE TRUE WE WOULD NOT BE DISCUSSING THIS HERE. i would have purchased the land at orgadam for 15 lakhs and would have sold it at 15 c and would have been vacationing:DManoj,

    I did some calculations relating to the future to scare the readers on this post under "uninhibited exuberance".

    To sum up, if you buy at 2.4 crores per ground and hope for a 25% CAGR over next 20 years (some geniuses do believe it and espouse it on this forum to palm off their property to the unwary!), you need to find a buyer at 104 crores for 1200 Sft and this amount at 35% pa shoots up to 485 crores.

    I dont agree on assuming somethings cannot happen in 20 years

    consider this
    3 years back land at many places in orgadam,sripermbundur was 1000/cent,I ridiculed the broker that these are jungles and i might never find a buyer at these places. today the same places are commanding prices of 150000-200000 per cent.
    if something like this can happen in 3 years same things can happen in 20 yrs.
    you just cannot ridicule it (as i did 3 yrs back)
    AND IF EVERY PREDICTIONS BASED ON STATS AND ESTIMATES WHERE TRUE WE WOULD NOT BE DISCUSSING THIS HERE. i would have purchased the land at orgadam for 15 lakhs and would have sold it at 15 c and would have been vacationing:D
    CommentQuote
  • Chennai RE price trend

    Originally Posted by Manoj Misra
    Friends, more thoughts on this subject please?


    My experience in the last 6 months period on the trend:

    01) In the projects with fast progress and expected completion within the next 3 months or so- less reductions. If you stretch, it may go upto 10 % of the earlier prices.
    02) Ready to occupy flats in good locality- very limited reductions. Depends on the builder-quality of construction and the buyer's ability.
    03) Yet to start projects and delivery 24 months etc. - decent reductions like 15% can be possible along with the payments alternatives.
    04) Non water logging areas as could be seen from the recent rains- the reductions are not very much encouraging.
    05) But the fact remains, not much of real sales are happening and the buyers are waiting for the prices to come down appreciably where as the sellers are holding on, possibly due to pressure tatics from a handful of Builders who control the RE market in Chennai. I do not know how long can they hold on. But cracks are being seen now. Most builders also fear that if they sell the unsold flats now at lower prices, they may have to give the advantage of the lower prices to the already booked flats also. This is another deterent in the prices coming down appreciably.
    06) Builders also eagerly await the house loan interest rate coming down so that the enquiries/bookings can increase.
    07) In a nut shell, it looks like a near cartel in some localities holding on to their guns, fuelled by the black money doing its bit in Chennai in not coming out with prices to reduce reasonably.

    More expert views?

    ks2071746
    CommentQuote
  • Should one wait for the crash?.

    The markets can go only in three directions. Up, Down and Side.

    What am I going to do, if there is a crash(down) or if the market is flat. what is my investment objective.

    Am I going to buy a house or land to living or investment purpose. How strong is my bank statement( cash flow).

    Do I have the funds ready or looking for a loan?. How am I going to prepare for that.

    On the investment point, what I am looking for. What is the(ROI) Return on Investment expected.

    Is it a capital gain or cash model model.

    How many properties I am going to buy. Is it one or two or three. What is my capacity(Savings= Income - Expense),

    how can I improve that.

    Am I prepared to buy a property if there is crash. What can I do if the market is flat.

    It is always better to be prepared, instead of praying or dreaming for a crash or thinking of timing the market.

    No doubt yr 2009 and 2010 will offer the best investment oppurtunity both in stock market or real estate.


    Are you prepared.

    ( Interest rates, oil prices, inflation, boom and bust are the natural cycles of the economcy).
    CommentQuote
  • Should one wait for the crash?.
    The markets can go only in three directions. Up, Down and Side.
    What am I going to do, if there is a crash(down) or if the market is flat. what is my investment objective.
    Am I going to buy a house or land to living or investment purpose. How strong is my bank statement( cash flow).
    Do I have the funds ready or looking for a loan?. How am I going to prepare for that.
    On the investment point, what I am looking for. What is the(ROI) Return on Investment expected.
    Is it a capital gain or cash model model.
    How many properties I am going to buy. Is it one or two or three. What is my capacity(Savings= Income - Expense),
    how can I improve that.
    Am I prepared to buy a property if there is crash. What can I do if the market is flat.
    It is always better to be prepared, instead of praying or dreaming for a crash or thinking of timing the market.
    No doubt yr 2009 and 2010 will offer the best investment oppurtunity both in stock market or real estate.
    Are you prepared.
    ( Interest rates, oil prices, inflation, boom and bust are the natural cycles of the economcy).
    CommentQuote
  • Originally Posted by ks2071746
    My experience in the last 6 months period on the trend:

    01) In the projects with fast progress and expected completion within the next 3 months or so- less reductions. If you stretch, it may go upto 10 % of the earlier prices.
    02) Ready to occupy flats in good locality- very limited reductions. Depends on the builder-quality of construction and the buyer's ability.
    03) Yet to start projects and delivery 24 months etc. - decent reductions like 15% can be possible along with the payments alternatives.
    04) Non water logging areas as could be seen from the recent rains- the reductions are not very much encouraging.
    05) But the fact remains, not much of real sales are happening and the buyers are waiting for the prices to come down appreciably where as the sellers are holding on, possibly due to pressure tatics from a handful of Builders who control the RE market in Chennai. I do not know how long can they hold on. But cracks are being seen now. Most builders also fear that if they sell the unsold flats now at lower prices, they may have to give the advantage of the lower prices to the already booked flats also. This is another deterent in the prices coming down appreciably.
    06) Builders also eagerly await the house loan interest rate coming down so that the enquiries/bookings can increase.
    07) In a nut shell, it looks like a near cartel in some localities holding on to their guns, fuelled by the black money doing its bit in Chennai in not coming out with prices to reduce reasonably.

    More expert views?

    ks2071746


    Dear Friends,

    Most of you would have read the news in the papers today ( 03/02/09 ) that DLF may reduce the rates of their New Projects (Pl.note-New Projects) and the ROI for home loans may drop to about 7% by March/April 09. I had mentioned about the possibility in my above quoted message. If these happen fast, it is good for the buying community here.

    ks2071746
    CommentQuote
  • Hi folks,

    Agree with most of the points of

    Wiseman. Quite interesting!

    however one essential difference.

    Unlike stocks, House is not a

    commodity, its a necessity.

    Fundamental rules of ROR (rate of

    returns) may not be applicable in

    totality.
    CommentQuote
  • Don't postpone. Time is always ripe to invest.

    I am from Bangalore. In Dec 2007, people said real estate in Bangalore was a bubble. Now one and half year later prices are still holding. There is no price crash.

    The property in which one of my family members invested in Oct 2007 at Rs 4500/sq.ft is now going at Rs.4900/sq.ft. In Jan 2003, the same plot would have costed Rs.400/Sq.ft. But I advised her not to postpone (expecting a fall to flashback prices) and instead buy.

    She thanks me today saying that prices have not crashed like some doomsayers predicted. On the other hand, she has a own house to be proud of.
    CommentQuote
  • Wiseman,

    I am sure you would remember this thread. Can you please provide your expert comments on what you analyzed in 2008 and what has actually happened in last 2 years. About RE prices and $ appreciation.

    Not targeting you but want to have a healthy discussion.

    Thanks,
    Tarun
    CommentQuote
  • Crash has not happened ... yet

    Originally Posted by tarung
    Wiseman,

    I am sure you would remember this thread. Can you please provide your expert comments on what you analyzed in 2008 and what has actually happened in last 2 years. About RE prices and $ appreciation.

    Not targeting you but want to have a healthy discussion.

    Thanks,
    Tarun



    Tarun,

    No issues about targeting. After all I need to defend my position if it is still defendable.

    First, my call for the crash in prices I think was still valid. If, like in 1995 the bubble had been allowed to burst, it would have crashed. Remember, there was no global economic crisis back in 1995 and still our RE market had its first crash after a run up in prices which was our first boom in RE. This was the first time in memory that people had witnessed a boom followed by a crash. I believed this would repeat in 2008 since we had a genuine crisis!

    Two things came in the way.

    First, the buyer psychology in 2008 was vastly different from 1995. People are willing to take on vastly more risk (and have access to much higher leverage on an already high wage level) now than back in 1995. So they continue to buy RE at much-above-intrinsic-value and keep certain amount of volumes going to give builders hope that they can eventually get out of their own debt crisis by selling to greater fools.

    Second, builders managed to access lines of credit like PE funds to maintain their very high levels of debt sunk into inventory and NOT collapse, like they did back then.

    Therefore the crash has not happened ... YET! :D (though there has been significant drops in prices in many boom areas some even to 35% - 40%).

    Given that the world is a much worse place in 2011 than it was in 2008, I continue to believe that a crash of even larger proportions is inevitable in the future and this should produce the anticipated crash in prices of RE which would give me the opportunity to enter.

    I have the patience to wait for such time while putting my cash to good use in getting returns from other assets like the markets. After all, if I can wait for Stock P/Es to come down to mid-single-digits before buying, surely I also have the patience to wait for RE for a once-in-a-generation opportunity to buy?:D

    cheers
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  • Kuch $ -Rs appreciation ke bare main bhee bolo yaar.
    CommentQuote