Why buying a house is outrageously expensive

[mkrishna100]

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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.

Very true . Yesterday I met a relative of mine and he told he purcahed an apartment in 2015 after selling one of his propertyin Chennai but he choose to buy an apartment with a small builder on the outskirts of Chennai ( i.e builders who construct 6-8 aparments on a plot of land with just 2 apartments in each floor ) and these people do a good job and give individual attention and complete the project in time and are also fairly priced ( of course there are some crooks in these small builders also )within a Km to where his apartment is , there is a huge apartment complex ( of some Prominent Builder ) with many towers and it is looking like a ghost building and he told it has been like this for many years and no idea how many apartments are sold , how many unsold but the fact is that the construction is stopped and it is looking like a Ghost Building while all the people in his small apartment complex have moved in and leading normal lives .So there is still space for genuine buying and selling among small builders but the big builders with their false promose have only resulted in this huge mess .

 

[vgane]

Each one of the investors is fighting some battle or other with the builder in the NCR...Most of the people have invested 80 t0 95% of savings in real estate..Many are servicing 2 or more number of oans...NCR is not end user led but mostly investor led...I happened to meet a hapless investor recently..He got booked a HIG flat of 2400 sq.ft for Rs 5000 Per Sq Feet in early 2012..He has taken a Rs 85 lac loan & is paying EMI at an average interest of 10% in last 4 years+...His tax outgo is about Rs 35 lacs.It means his property should be worth @ 6500 per sq ft....But market price has crashed & is Rs 4000 sq.ft...Net loss=Rs 2500/sq feet=Rs 60.00 Lacs..He is panicking now

 

[yesmohan]

I know several properties that are not fetching rent...Two newly constructed flats in Saligramam, Chennai in a good locality have no tenants...One for the past 30 months & other for 6 months...The person is frustrated...They have tried all means (dealer, website advertising...)

In all areas of Chennai, a lot of "To Let " boards are hanging.

Either the supply is more...........on account of a large expansion ...in building activities;

or the demand has come to stand still / decreasing trend..... as no intake in software industries and a number of software industries have migrated to Bangalore / Hyderabad.

 

[yesmohan]

Each one of the investors is fighting some battle or other with the builder in the NCR...Most of the people have invested 80 t0 95% of savings in real estate..Many are servicing 2 or more number of oans...NCR is not end user led but mostly investor led...I happened to meet a hapless investor recently..He got booked a HIG flat of 2400 sq.ft for Rs 5000 Per Sq Feet in early 2012..He has taken a Rs 85 lac loan & is paying EMI at an average interest of 10% in last 4 years+...His tax outgo is about Rs 35 lacs.It means his property should be worth @ 6500 per sq ft....But market price has crashed & is Rs 4000 sq.ft...Net loss=Rs 2500/sq feet=Rs 60.00 Lacs..He is panicking now

I remember reading one of the short stories written by R.K.Narayanan ( I have forgotten the tittle of that story as it was read some 40 years ago) wherein he humorous concluded with the version:

Fools build houses;and wise rent on them !

As such, do not calculate rate of return on buildings !!

 

[krish44]

If people let their flats to bachelors,single working women , they will easily get tenants.

Again restrictions like vegetarianism,religion can put off those with capacity to pay good rent

That requires change in mindset.

 

[mkrishna100]

If people let their flats to bachelors,single working women , they will easily get tenants.

Again restrictions like vegetarianism,religion can put off those with capacity to pay good rent

That requires change in mindset.

The only change in mindset is keep you rent 25% less than what the market demnads and you will get un-interrupted rent without any break . Problem is many people keep playing to the market and keep raising the rent as the market raises and when the market crashes their EGo is unable to let go and bring down the rent and so their apartments are always vacant . Good and decent tenants ( across all sections of the society ) are always available for a fair value which must be less than what the market demands .I had already mentioned earlier a relative of mine was increasing the rent of his sister ( vey ordinary apartment in the heart of Chennai ) and was also getting rent but then it started to get dry and he was struggling for more than 6 months and I told him that bring down the rent by 25% and see and he was shocked to see many people coming for the same .

 

[mkrishna100]

In all areas of Chennai, a lot of "To Let " boards are hanging.

Either the supply is more...........on account of a large expansion ...in building activities;

or the demand has come to stand still / decreasing trend..... as no intake in software industries and a number of software industries have migrated to Bangalore / Hyderabad.

Many new apartments have come up in OMR Road and most of the IT Crowd who were paying fancy rent have moved in to their own apartment in OMR and other areas closer to IT Parks and the current owners still expect the 'IT WALA" rent and as long as they have such an expectation their apartments will remain vacant and they have to understand the reality and bring down the rent to "Non IT Wala " standards and they will have many takers for the same .

 

[tbs]

Many new apartments have come up in OMR Road and most of the IT Crowd who were paying fancy rent have moved in to their own apartment in OMR and other areas closer to IT Parks and the current owners still expect the 'IT WALA" rent and as long as they have such an expectation their apartments will remain vacant and they have to understand the reality and bring down the rent to "Non IT Wala " standards and they will have many takers for the same .

hi

i have a house in ECR chennai....many tenants are IT WALA.....some flats are many IT GALS aa group....both rents are falling

down..many IT WALAS changing company/location too... but i leased to nationalised bank and manager is the tenant with

regular rent into bank a/c directly every month....no problem so far...

 

[mkrishna100]

hi

i have a house in ECR chennai....many tenants are IT WALA.....some flats are many IT GALS aa group....both rents are falling

down..many IT WALAS changing company/location too... but i leased to nationalised bank and manager is the tenant with

regular rent into bank a/c directly every month....no problem so far.

Bank Managers , PSU Employees will give you regular rent provided the rent you charge is within the rental benefits they get .The problem comes only when you hike the rent much more than what they are entitled for the rental benefits .

 

[mkrishna100]

Also there is a myth that all IT waals earn fat salary .Only 20% of IT Walas working for the Top IT Companies earn fat salary and rest earn only normal decent salary and not the big fat salary that everyone expects .

 

[krish44]

People in chennai believe in Aadi and this month from july 16th , no takers for one month.

Nor can marry anyone.lol

Life comes to a standstill in Aadi .

Only temples collections increase.

 

[mkrishna100]

People in chennai believe in Aadi and this month from july 16th , no takers for one month.

Nor can marry anyone.lol

Life comes to a standstill in Aadi .

Only temples collections increase.

Sorry Boss you are mistaken . No doubt in AAdi rent and buying properties , marriage will not take place but lot of shopping will take place as you get great discounts and yesterday we had a family get together of 50 people and a cousin of mine from abroad spent for a good lunch for 50+ of our family members and relatives .
So in Aadi : do shopping , visit temples , have family get together and so either you spend or enjoy others spending LOL .

 

[shankar09]

I am having 2 flats in OMR - Karapakkam nearby many landmarks and IT corridors doesn't fetch money from the day i took the possession.

 

[V.Balasubramani]

No doubt in AAdi rent and buying properties , marriage will not take place but lot of shopping will take place as you get great discounts and yesterday we had a family get together of 50 people and a cousin of mine from abroad spent for a good lunch for 50+ of our family members and relatives .
So in Aadi : do shopping , visit temples , have family get together and so either you spend or enjoy others spending LOL .

Yes.... Aadi , the tamil month is generally considered as an inauspicious month for starting new ventures, changing homes and the like. Over the past decade and more, to pick up sales during this time, store owners started announcing offers and this had now come to stay. Discount sales are nothing more than an eye-wash, sums up Rajan of Consumers Association of India.

Source: Aadi sale: how genuine is it?
Link: http://www.thehindu.com/news/cities/chennai/aadi-sale-how-genuine-is-it/article3726599.ece

 

[mkrishna100]

Each one of the investors is fighting some battle or other with the builder in the NCR...Most of the people have invested 80 t0 95% of savings in real estate..Many are servicing 2 or more number of oans...NCR is not end user led but mostly investor led...I happened to meet a hapless investor recently..He got booked a HIG flat of 2400 sq.ft for Rs 5000 Per Sq Feet in early 2012..He has taken a Rs 85 lac loan & is paying EMI at an average interest of 10% in last 4 years+...His tax outgo is about Rs 35 lacs.It means his property should be worth @ 6500 per sq ft....But market price has crashed & is Rs 4000 sq.ft...Net loss=Rs 2500/sq feet=Rs 60.00 Lacs..He is panicking now

At least is his apartment ready for occupation ?

 

[krish44]

Sorry Boss you are mistaken . No doubt in AAdi rent and buying properties , marriage will not take place but lot of shopping will take place as you get great discounts and yesterday we had a family get together of 50 people and a cousin of mine from abroad spent for a good lunch for 50+ of our family members and relatives .
So in Aadi : do shopping , visit temples , have family get together and so either you spend or enjoy others spending LOL .

My property advisor in chennai advised me yesterday not to expect any tenant for rent for one month.He is a local fellow. He should know

 

[mkrishna100]

My property advisor in chennai advised me yesterday not to expect any tenant for rent for one month.He is a local fellow. He should know

Yes I too accept that only that I said apart from rents , property deals , marriages all other activities go very well . Shops , Temples and Restaurants will be fully occupied this month .

 

[vgane]

At least is his apartment ready for occupation ?

Only structure is ready...The construction stopped a year back

 

[mkrishna100]

Only structure is ready...The construction stopped a year back

Then he is in a very big trouble .I doubt anybody will be willing to buy from him at this stage and moreover he wont even get any form of rental income from that apartment .

 

[vgane]

Then he is in a very big trouble .I doubt anybody will be willing to buy from him at this stage and moreover he wont even get any form of rental income from that apartment .

It is a sad state of affairs for those who invested in NCR market from 2011 onward!