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Why buying a house is outrageously expensive

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vgane

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I guess we are on a long recession as far as housing prices are concerned..It is very subdued in large metros with huge availability of unsold property...Prices will raise as soon as Interest rates fall which is the current expectation..Those who want to buy property this is the apt time! But do not forget the adage "Cash is king"
 
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V.Balasubramani

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I have been visiting to transact an apartment for a friend of mine. And this one is located at Thiruneermalai, which falls under the jurisdiction of Chrompet, Chennai-600 044.

When I visited that place, more specifically Thiruneermalai Main Road, I can see there are lot of gated community and apartments promoted by three different reputed builders.

But the area was comparatively calm and not so busy with such number of apartments spread over everywhere. When I enquired, I was told that most of the apartments are vacant and there are no takers. And this is because when there was flood in December last year, the entire ground floor of most of these apartments were submerged. Just think about the fate of those who occupied the first, second and other floors with 10 feet water level from ground.

I was even told one of the builder is almost bankrupt now. How are these builders going to realise their money which stands as concrete jungle with no demand.

This natural disaster seems to have turned the dreams of this Real Estate business community into a question mark.

Now one can read this news item

Realty Bites Chennai Home Buyers Hard After Floods, Demand for 'Lake Side' Properties Drops

CHENNAI: “Was the project affected by the floods?” asks a wary customer. “No ma’am,” goes the reply. “Well then, do you have pictures to prove that?” she counters. This is how every project enquiry goes now, admits Yaseer Rahman of Connection Point and treasurer of the Chennai Real Estate Agents Association.

Chennai consumers have caught a sudden and much-needed dose of mindfulness about the location of their homes. What the city wants from its property developers and agents has changed big.

Not only has what they want from their prospective homes changed, a large majority of the city’s denizens are actually acting on these newfound sentiments. Those who can drop investments in existing projects are trying really hard to, and many who want to, are stuck with homes they cannot afford to sell. If at all they can.

“I bought a home in Pallikaranai less than a year ago for Rs 70 lakh. I thought it was a good investment then, but 12 feet of water has disabused me of that notion quite effectively,” points out S Reddy, software engineer.
Reddy, however, has not much of a choice but to hold on to the property, come rain or sunshine, or even floods. Because rates in flood-affected areas are expected to plummet.

“The house was bought on loan. I broached an agent about the prospects of selling it with the loan, but he told me to forget about it for a couple of months. And even if something comes up later, I won’t be able to get the money I put in,” he confesses.
Reddy’s situation is mirrored by many in formerly hot areas like Velachery, Pallikaranai, OMR, certain areas of GST Road and almost all projects close to the Adyar and the Cooum. People with projects on the OMR, especially, are moving.

Take S Shiela, a Bengaluru resident, who decided to invest in a property in Perumbakkam. Now, she finds herself the owner of a new luxury-home that became part of a lake for a whole week. “The parking level was very low, and water had gotten in, fully submerging all the cars. I had bought a ground-floor villa,” says Shiela, who is stuck with the ‘investment’.

Those who can cancel bookings however, are doing so. A loss of a lakh or so rupees notwithstanding. “I myself have cancelled several bookings in half completed projects for my clients,” said Rahman. But not all projects are seeing cancellations. Some, even in areas where flood waters reigned high, are seeing a rise in bookings. The difference? “The projects seeing a rise in bookings are those which have not yet taken off. The rationale being that deficiencies in the design can be corrected, now that consumers know what they want,” he said.

Sentiments in the rental space, however, are moving a lot faster. Tenants in almost all flood-affected areas have started looking for homes. “A client moved from Chetpet, which saw only a feet or so of water to Egmore, paying nearly 25 per cent more, because he was scared,” said Rahman. Odd though, is how rentals are moving at OMR. According to agents there, tenants are trying to shift from places a little further in from the main road to the main road. OMR’s tenants have started churning within the locality itself and this is likely to continue.

But what are the specifics driving the churn, both in OMR and the city as a whole. Consumers have new wants now. “I would not dream of getting a house that does not have a Reverse Osmosis plant and a self contained water supply,” declares Raja Balasubramanian. A demand sparked by having spent three days rationing one can of water at a friend’s house.

Source: http://www.newindianexpress.com/cit...roperties-Drops/2016/01/04/article3210265.ece
 
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mkrishna100

Well-known member
This natural disaster seems to have turned the dreams of this Real Estate business community into a question mark.

Chennai's flood has only worsened the RE sector which was already over hyped and the time of correction had come and the floods are proving to the starting point of such a correction .
 

mkrishna100

Well-known member
I guess we are on a long recession as far as housing prices are concerned..It is very subdued in large metros with huge availability of unsold property...Prices will raise as soon as Interest rates fall which is the current expectation..Those who want to buy property this is the apt time! But do not forget the adage "Cash is king"

I think falling interest rates will be only a small consolation but the larger issue is the really unaffordable property prices .I can agree Premium Apartments quoting big rates but even horrible , old ,useless apartments are also quoting atsronomical rates and unless there is a 25-30% correction in prices there wont be takers for many of these apartments either old or new . There is a big demand for housing among the middle class but unless it comes to the affordable levels I doubt whether we will see any fresh purchase of property in the near future .
 
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vgane

Well-known member
I think falling interest rates will be only a small consolation but the larger issue is the really unaffordable property prices .I can agree Premium Apartments quoting big rates but even horrible , old ,useless apartments are also quoting atsronomical rates and unless there is a 25-30% correction in prices there wont be takers for many of these apartments either old or new . There is a big demand for housing among the middle class but unless it comes to the affordable levels I doubt whether we will see any fresh purchase of property in the near future .
In NCR belt prices are stagnant for the past 24 months or have dropped 15-20%..As constructed flats are unoccupied the developers are offering additional discounts...It is a buyers market now...Investors have however vanished!
 

GANESH65

Well-known member
The proposals to ban cash transactions above 3.00 lacs, if implemented would further dry up the real estate market.
 

mkrishna100

Well-known member
The Scenario right now is similar to the scenario that we faced in the late 90s when real estate crashed and many financial institutions ( NBFCs ) collapsed . Liquidity is drying out and that is creating havoc in the Real Estate Sector with many builders unable to complete their projects on time and that is causing lot of misery to normal middle class people who have invested in these properties taking loans and staying on rent outside and till they are able to go to the new apartments they will have to keep paying rent as well as the EMIs . Even those who got their apartments after long delay have to confront new problems like lack of adequate facilities in their apartments , poor quality fittings , the promised amenities not there and they again have to shell a lot of money to fix these problems and it is putting lot of financial pressure on many middle class families ( along with mental pressure ) . The only thing bright right now is the Stock Market which again many say is artificially inflated and if the stock market also crashes then it will be a very big financial meltdown in entire India and will lead to a bearish scenario that will take 5-10 years to recover .I do not see any bright days ahead as far as India's Real Estate and financial sector is concerned .
 
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vgane

Well-known member
The Scenario right now is similar to the scenario that we faced in the late 90s when real estate crashed and many financial institutions ( NBFCs ) collapsed . Liquidity is drying out and that is creating havoc in the Real Estate Sector with many builders unable to complete their projects on time and that is causing lot of misery to normal middle class people who have invested in these properties taking loans and staying on rent outside and till they are able to go to the new apartments they will have to keep paying rent as well as the EMIs . Even those who got their apartments after long delay have to confront new problems like lack of adequate facilities in their apartments , poor quality fittings , the promised amenities not there and they again have to shell a lot of money to fix these problems and it is putting lot of financial pressure on many middle class families ( along with mental pressure ) . The only thing bright right now is the Stock Market which again many say is artificially inflated and if the stock market also crashes then it will be a very big financial meltdown in entire India and will lead to a bearish scenario that will take 5-10 years to recover .I do not see any bring days ahead as far as India's Real Estate and financial sector is concerned .

Even if our GDP is overstated by 2% even at 5% growth we are envy of the world! What to say of the rest of the world? But we are not happy as per the posts! Let us take solace in the fact that the grass is always greener on the other side!
 

mkrishna100

Well-known member
Even if our GDP is overstated by 2% even at 5% growth we are envy of the world! What to say of the rest of the world? But we are not happy as per the posts! Let us take solace in the fact that the grass is always greener on the other side!

I am not aware of the GDP , Inflation figures etc but what I am anticipating is a big fall in the RE Sector and its negative multiplier effect .I remember the same scenario happened in the late 90s and we had to wait till 2006 for things to brighten up a bit . Many Indians can consider themselves lucky as they have at least one of their children in USA, UK ,Dubai , Australia etc ( i. earning in foreign currency ) or working in the IT field ( i.e better salaries then the avrage Indian in a Non IT field ) and they can withstand this financial shock and hence there is still some tolerance inspite of the mess in RE and its negative multiplier effect .
 

tbs

Well-known member
In NCR belt prices are stagnant for the past 24 months or have dropped 15-20%..As constructed flats are unoccupied the developers are offering additional discounts...It is a buyers market now...Investors have however vanished!

hi

in greater noida....many flats are still vacant....just waiting for any NRI...
 

mkrishna100

Well-known member
hi

in greater noida....many flats are still vacant....just waiting for any NRI...

Many NRI's , HNIs book these apartments hoping either they would themselves settle there or hope another NRI, HNI will buy the same . Now no more fools to buy property in those vacant buildings .So their money is stuck there .
 

krish44

Gold Member
Gold Member
There are two ways of looking at the scenario.

One with instinct of a gambler, have hope that things will improve and buy up distressed properties at rock bottom. Of course difficult to guess where is the bottom?

The other way lament, paint a doomsday scenario, sit tight on money which anyway will depreciate if invested in securities.

Ultimately it is the mindset.

I belong to the former category.

In every distress I see oppurtunity.

Senior citizens have nothing to lose except the shirt and dhoti. So we can merrily take the risks and plunge when we see as oppurtunity.

Like yesterday I did bottom fishing and bought infosys shares. Let us see. Sikka will make money for us.lol. He has to redeem his name.

Next is Mukesh Ambani. He has announced superlative results for RIL. Why not fish further?.

I see potential in coimbotore housing. let me examine the brahmin and half brahmin companies which some suggest here.

This is based on the assumption that these fellows will kiss us on both cheeks when we play the caste card and give us a good deal.lol
 

krish44

Gold Member
Gold Member
Many NRI's , HNIs book these apartments hoping either they would themselves settle there or hope another NRI, HNI will buy the same . Now no more fools to buy property in those vacant buildings .So their money is stuck there .
my grand nephew bought a completed flat a few months back in greater noida and doing grahapravesam in september.

Of course he is in IT with working wife back up.

If one pays astronomical rents in delhi best throw money into own flat through money borrowed from housing finance companies.
 

mkrishna100

Well-known member
my grand nephew bought a completed flat a few months back in greater noida and doing grahapravesam in september.

Of course he is in IT with working wife back up.

If one pays astronomical rents in delhi best throw money into own flat through money borrowed from housing finance companies.

If you buy a property for your own use then it does not matter much how much you paid for it as long as you are able to pay the EMI for the same .At least you enjoy your property .The problem comes when you buy an apartment and leave it for rent and if your monthly EMI comes to Rs75,000 and your monthly rent from that apartment is Rs25,000 .In this case your tenant enjoys your apartment and not you .
 

mkrishna100

Well-known member
One with instinct of a gambler, have hope that things will improve and buy up distressed properties at rock bottom. Of course difficult to guess where is the bottom?

True many people have this difficulty in finding which is the real bottom ( for buying ) and which is the real top ( for selling ) . The difference between Ordinary and Extraordinary investors lies in understanding this difference . Master Investors enter when there is maximum pessimism and exit at maximum optimism .

In every distress I see oppurtunity.

You have to be careful here as not all distress assets are valuable just because it is cheap . If a rogue promoter builds his apartment in a land ( that was acquired by unfair means ) and also builds an apartment without proper building permits and if he is willing to give a 50% discount on the same then it is risky buying those sort of assets as once the law comes in to play your entire assets will be razed down ( eg. Campa Cola Society in Mumbai ) .
Same with stocks . In 2008 when there was a big stock market crash , a friend of mine who was himself working in Satyam told that satyam stock was undervalued and worth buying and acquired stocks in thousands only to find the entire company closing down next year and not only he lost his job but also the money invested in the satyam stock .

So in conclusion : Always better to get good assets ( stock or property ) even if you have to pay a premium for the same .Good things though do not come cheap but will be available for discount when there is a bearish scenario . If you are a short term trader then it does not matter much whether you buy good or junk but if you are a long term player better to focus on quality stuff at discounted rates than going for junk stuff even if it is available at a bigger discounts .
 
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vgane

Well-known member
This is the prediction of a top industrialist"Harsh Goenka"

With better communication, IoT, e-shopping, driverless cars, real estate in urban areas will sharply fall in future.

Add conquering outer space to this list!
 

auh

New member
Eventually, the cities would lose their allure. It would make better sense to have independepent houses where water and food security is available. Families with self-sustaining methods of agriculture (home gardening) would be secured the most.
 
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vgane

Well-known member
Eventually, the cities would lose their allure. It would make better sense to have independepent houses where water and food security is available. Families with self-sustaining methods of agriculture (home gardening) would be secured the most.

True..There are many palatial farm houses that are constructed in Kerala along the Highways...It is a seamless connection of many towns that it is difficult to differentiate a village from town
 
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V.Balasubramani

Guest
Here at NCR, it appears that buyers are at the mercy of builders.

How buying a flat became a nightmare in NCR

India’s biggest property market by volume has numerous projects stuck for years. What has led to this dismal situation?

realestateramesh-komG--621x414@LiveMint.jpg



Unsold inventory in the National Capital Region has hit a high of 267,000 units by the end of March 2016, according to property consultants. Photo: Ramesh Pathania/Mint--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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New Delhi:
On a blazing hot Saturday afternoon in June, a group of people assembled in a small room in an under-construction building at Today Ridge Residency, Sector-135, Noida, a part of the National Capital Region (NCR) centred around Delhi.

The motley group, with people ranging from senior citizens to software engineers, had one thing in common. Each one of them has parted with a huge chunk of their savings to buy a home, which had not been delivered to them.

Most of them booked an apartment in the project owned by Today Homes and Infrastructure Pvt. Ltd in 2010.

The buyers were assured of delivery in about two-and-a-half years; it has been six years now and most are yet to get possession.

At some other projects by builders such as Unitech Ltd, Amrapali Group, The 3C Company, Gardenia Group and Jaypee Group, the wait for possession has lasted more than eight years.
Rajiv Kumar Goel, who works for a private firm, said he commutes every Saturday for five hours to and from Faridabad to join the group.

“I have to take leave every Saturday to come here and my company cuts that amount from my salary,” he said.

Today Homes, The 3C company, Gardenia Group, Amrapali Group and Jaypee Group did not respond to a Mintquestionnaire sent a day earlier.

The NCR, India’s biggest property market in terms of volume, has numerous projects such as Today Ridge Residency that have been stuck for years, with just concrete structures and minimal work on the ground.

A combination of lack of funds, rising debt, unsold inventory, a trust deficit among customers and incessant litigation have brought the sector to a standstill, with no takers for the flats under construction.

A Knight Frank India report released on 4 July said that new launches in the NCR have been in a decline since 2010 and have dropped by more than half over the last six years.

Property consultant Liases Foras said NCR has witnessed a rise in unsold inventory by almost 14% to hit a high of 267,000 units by the end of March 2016 and it will take around six years to sell them.

The rot began to set in during the early part of the decade. The residential property market touched a high in early 2010 with firms raising loans to enter real estate in pursuit of what looked like an unstoppable boom.

“In the last 4-5 years we saw everyone from every industry come to real estate. Shoemakers and milk packagers, Godrej, Tata and the who’s who of the world entered the business. But many of them are stuck now,” Omaxe Ltd chief executive Mohit Goel said in an interview.

Read more at: http://www.livemint.com/Companies/p...-buying-a-flat-became-a-nightmare-in-NCR.html
 
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