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Should one really wait for Price Crash?

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Should one really wait for Price Crash?

Last updated: December 19 2010
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  • #51

    #51

    Re : Should one really wait for Price Crash?

    Originally posted by ks2071746 View Post
    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

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    • #52

      #52

      Re : Should one really wait for Price Crash?

      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.

      Comment

      • #53

        #53

        Re : Should one really wait for Price Crash?

        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.
        Last edited May 26 2009, 01:16 PM.

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        • #54

          #54

          Re : Should one really wait for Price Crash?

          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
          Last edited December 18 2010, 08:36 PM.

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          • #55

            #55

            Re : Should one really wait for Price Crash?

            Crash has not happened ... yet

            Originally posted by tarung View Post
            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! (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?

            cheers
            Last edited December 19 2010, 12:12 AM.

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            • #56

              #56

              Re : Should one really wait for Price Crash?

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

              Comment

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