Most of us have gone for booking a Marriage Hall for Bro/Sis.. relative or own wedding..
There they have this monopoly system of Decorators and Food Providers.. SO you have to pay the Price they quote even though you know... by Cost it should not be that high.. and you also know even if u add a suitable margin it should not be that high.. but the margin for them is huge.. as they sert the prices.. and there is no one to challenge it.... since it is a monopoly. Same with the Builders Union.. or Cartel.. Their Costs are not hight still they want to sell it for huge margins...!!!!
1.false & overhyping of india's business prospects by foreign agencies to tempt india for opening market.
2.free run by govt. to speculators and black money in real estate.
3.greed among indian people.they rushed to buy real estate as if no tommorrow and encouraged speculators and black money.
4. too liberal distribution of real estate loans by banks. now most of the banks are facing sub-prime crisis.
prices rose by 300%-400% and this bloody UPA govt. was sleeping and happily supporting it. high real estate prices and high rentals are also major reasons for inflation.medium business can not even rent ,forget buying a property for office in metros.also genuine house buyers,retired person's dreams were shattered due to high prices.imagine 300-400 % rise in 2.5 years.even decent upper middle class could not purchase any house now people should maintain patience and wait till this year till prices are at realistic levels and real estate bubble bursts with a loud bang as was few years back.
RE:bubble
by Vijay K on Jul 29, 2008 06:00 PM Permalink
Have you ever seen a Middle class long term Builder?
If a builder has been in the construction business for long.. He has made such a huge margin that he owns prime properties worth Crores and Huge long Luxury Cars..!!!
Just to tell you guys.. it is the huge margin that the builders have that made them earn all that..
RE:bubble
by Ram Krish on Jul 31, 2008 09:56 PM Permalink
Why blame the builders for the stupidity of buyers.
You will find that many (if not most) of the buyers in the last 5-6 years were youngsters just out of college OR maybe with a few years' experience. The common characteristic amongst them is ignorance. Firstly about what a downtrend looks like and how it can ravage ones finances. Second, about the fact that no one can possibly guarantee a high and ever-growing salary for 20 years. Thirdly, about being savvy enough to ask questions such that they are sure of paying a decent premium and NOT be robbed blind. But most important of all, in not having the common-sense to understand that NOTHING on earth can be achieved overnight, especially wealth, by flipping and speculating in Real Estate.
At the end of this decline (which, in my opinion will take RE down by 50% to 75%) we will have a whole generation of youngsters much wiser though much poorer.
Rocker is absolutely right. The smart will wait to buy property at distress prices. And the foolish will learn from the school-of-hard-knocks and get smarter for the next cycle.
Even if the prices come down the total cost wont come down due to escalation in input costs. I bought a house for a reasonable price. But the other things like paiting, cup boards cost a fortune. May be it is not wise to invest in house in next few years as the interest rates are also high high and higher.....
RE:The prices will never come down
by Vijay K on Jul 29, 2008 05:25 PM Permalink
Greed Greed everywhere..!!!!! One owning a Maruti 800 wants a Zen.. One owning a Zen wants a SX4.. One owning a SX4 wants a Corolla.. One owning a Corolla wants a Civic.. One owning a Civic wants a Accord.. One owning a Accord wants a Merc.. One owning a Merc wants a BMW.. One owning a BMW wants a Chopper.. One owning a Chopper wants a private jet.. One owning a Private jet wants a personal island..
Greed never Stops..!!! and so a small increase in input costs.. escaltes to a huge increase in the final product.
RE:The prices will never come down
by Krishna Kumar on Jul 30, 2008 09:06 AM Permalink
Vijay, this is not greed, but human aspirations...everyone in the society would like to be a step higher than what they are currently....
RE:The prices will never come down
by albert mendonca on Aug 06, 2008 03:05 AM Permalink
There is a distinction between a need and a greed... that u must realize if you want to be happy....The ones pointed above are from a "greed" perspective.. not from "need". What you sow is what you reap.
RE:The prices will never come down
by Guest on Jul 31, 2008 11:11 AM Permalink
human aspirations!!!..thats too funny..step higher!! stop my stomach hurts.
RE:The prices will never come down
by johnson dsouza on Jul 29, 2008 05:10 PM Permalink
You are among those few lucky people who bought a house when the prices were within the reach of salaries people….but now how can we justify 1 crore rupees for 2BHK flat at Andheri? The same goes above 70 lacs in Borivali/Kandivali!!…..I don’t think that the builders would be able to sustain these prices for longer time….Even some people who had bought properties in Mumbai mostly NRIs are selling their properties as buying properties in western countries have become cheaper than in cities like Mumbai…..Some internal migrants who are using rented flats are relocating to their native places/other cities due to higher cost of living in Mumbai and growing employment opportunities in Tier 2 cities….
If you hope to buy when market is down, bear in mind that interest rate will be very high at that point and employment will be at lowest level. So buying when property market bottoms is also a dream situation.
And as soon as property prices bottom out, investors & NRIs will jump in with cash to buy those cheap properties and then common will follow the trend in panic again. That will drive the prices up again.
RE:all you hopeful people
by Ram Krish on Jul 31, 2008 10:10 PM Permalink
Amitabh, obviously you are young in age. Therefore you do not understand that markets are not run on mathematics and logic alone (otherwise the richest people on earth would be mathematicians and logicians :).
Its run on the two human traits - Greed and Fear. These are the ones that create cycles (although natural cycles are governed by other factors as well). Greed creates boom legs (eexcessive ones like this creates super-booms once in 60 years). Fear creates bear and super-bears.
Please note that when EVERY SINGLE investor and analyst was looking at 25000 (just 7 months ago on New Year's eve), the market topped and then crashed. Similarly, the Real Estate bottom will not be reached in a great hurry. There will always be 'investors' and 'NRIs' with cash in hand. But REAL BOTTOM will be reached when NONE of these people will have the willingness or courage to buy because of the continuous and severe damage the many down waves will have done to their confidence and optimism.
And this damage will ensure that prices will decline by 50% to 75%, BEFORE the bottom is reached. I have seen 5 bear markets in Stocks and 2 in RE. And this BEAR is estimated to be the REALLY BIG Tsunami which even I have not seen. RE will first have to become a HATED sector before it bottoms. Thats the law of nature.
RE:all you hopeful people
by Vijay K on Jul 29, 2008 05:11 PM Permalink
In an way what you are saying is about the Demand and Supply equation that will set the prices of Flats.
Unfortunately i dont think in case of Real Estate that is always true.... I personally know of a Raheja Tower in Andheri.. where the builder does not want to reduce the rate even thought there are empty flats in the Tower and it has laready been 8-9 years since the Tower was built.
RE:any idea what rate is at kamothe/mansarovar station? 15 min walk?
by johnson dsouza on Jul 29, 2008 04:36 PM Permalink
pls do not plan to buy for at least next 8-15 months if you are going to borrow majority of the property cost…Builder lobby is holding the prices in the hope that people will start booking in coming festive days like Diwali, Dashera….they are strong and can sustain another couple of months but after that they will have to bend down to the real market situation and reduce the prices by at least 30 percent…
RE:any idea what rate is at kamothe/mansarovar station? 15 min walk?
by ajay on Jul 29, 2008 04:41 PM Permalink
yessss thats what is reqd..just dont rush to buy properties even for a small fall..the prices will come down for sure
RE:RE:any idea what rate is at kamothe/mansarovar station? 15 min walk?
by rahul roy on Jul 30, 2008 11:44 AM Permalink
You are rite man, builder lobby is very strong. In current market, there are very few buyers are there but still they hold their prices for long time. But over a long run they have to reduce prices sharply if buyers keep patience.
a person with an annual package of 10 Lacs can't afford an house in Mumbai looking at his responsibilities towards his dependents like Children, Wife, Parents and Social responsibilities like paying IT, Professional Tax, Buying Tax, Selling Tax, Walking Tax, Flying Tax, Eating Tax, Staying Tax, Surchage etc…………This is just an example of income with 10 Lacs but all people are not earning that much and most of the middle class people have an annual salary package in between 3-5 Lacs…now how we justify their case to own an house?
RE:Affordability
by Ram Krish on Jul 31, 2008 11:34 PM Permalink
I'm amazed at the common sense that people exhibit here. Then why do so many people go and get into Debt Slavery (what else do you call living under constant pressure and fear for 20 years trying to pay off your home loan? :). Most of the people buying homes in recent times are "owners" in name only. Banks own your homes - and as you will realise soon, your souls as well!!!
We are conditioned from birth that if you don't have a home ASAP, somehow its like walking without clothes on main street. Worse! Somehow you are not enough of a man!!!
This was okay in the old days of joint families (where support was always there when needed), steady lifetime employment and slow and steady price growth (where declines in prices were few and minor in nature).
Today we are globalised - another term for "buyer/consumer beware!". The Developer, Producer, Government, everyone is out to screw the consumer at every opportunity. So, while we did not realise it in the past few years (because salaries were rising faster than RE prices and interest rates), the Govt also got into the act by taxing everything and everyone literally to death (as Johnson has so colorfully put :).
But the backlash is now coming. People who were happily but barely paying astronomical EMI to smiling Bankers (seen advertisements?) will now see declining salaries, lost jobs, increased expenses and eventually lose life savings. Tragedy!!! And this will turn RE into a villain Industry soon (not entirely their fault).
there was a mail circulating about the unity to be shown against builder/agent mafia.... a little while ago. I think what we are seeing is the fruit of unity shown by buyers. Mulund/bhandup/kanjur/vikhroli used to command rate of 3k PSF ...now it's more than 6K PSF. As somebody correctly put below...why so much increase??? suddenly what happened in here?? I am living on rent for last two and half years and WILL NOT buy a house unless rates are stabilized ( I am not asking for 3K PSF). Anyway at current rate I am NOT ABLE to buy home also.
RE:Realities must be banned
by ajay on Jul 29, 2008 04:17 PM Permalink
what ru trying to say?...infact government should take more steps in alloting more land for mass residential construction which will bring prices within reach of ordinary citizen..its again wishfull thinking as our government has not taken any steps and will not take in near future as most politiciens have major stakes in reality business
RE:RE:RE:Realities must be banned
by johnson dsouza on Jul 29, 2008 04:21 PM Permalink
I am trying to say that instead of selling land at higher prices to builder lobby for development govmt should allot that plot to agenices like MHADA and get it developed...
RE:Realities must be banned
by johnson dsouza on Jul 29, 2008 04:11 PM Permalink
nothing should be banned..the situation will get worst….instead the land should be handed over to govmt agencies like MHADA and ask them to develop it. MHADA needs to improve its quality standard and bring in fairness in its flat allotements..no one should be allowed to own two houses in MHADA....govmt wants to sale land at very high prices and hence they are holding back agencies like MHADA
RE:Realities must be banned
by Ram Krish on Jul 31, 2008 11:43 PM Permalink
Johnson. We have spent 60 years and discovered that handing anything over to Govt only reduces value, delays things and sharply increases corruption. Would you really like to put the safety of people in the hands of Politicians and Babus in building the roof over your head (it may literally fall on your head at any time). Just check out ANY Govt developed housing and you will get the picture.
Govt must only exist to GOVERN! Not to run business. They should enact fair laws, regulate business and enforce Law & Order. This alone will achieve your goal - of ensuring fair price and good quality. Don't spoil things by asking Bereaucrats to run business. I have high regard for their intelligence and savvy. But, they are not trained for running business (only administration). And their political masters will not allow them to run things smoothly!!!.
The Media especially the business entertainment channels like CNBC TV18 dont tell the true picture. The Real Estate Agents along with Builders are hand in glove. How can you expect a man with 10 Lakh rupee salary buy a Rs.80Lakh and upwards property in Mumbai. A decent 2BHK in Mumbai already above a Rs.1crore. This is a sad state indeed. A place like Belapur is commanding Rs.6k psf. Mulund Rs.6kpsf. What's so special about these places. Its just unaffordable now.
RE:Media Rah Rah
by johnson dsouza on Jul 29, 2008 04:18 PM Permalink
very true picture..a person with an annual package of 10 Lacs can't afford an house in Mumbai looking at his responsibilities towards his dependents like Children, Wife, Parents and Social responsibilities like paying IT, Professional Tax, Buying Tax, Selling Tax, Walking Tax, Flying Tax, Eating Tax, Staying Tax, Surchage etc…………This is just an example of income with 10 Lacs but all people are not earning that much and most of the middle class people have an annual salary package in between 3-5 Lacs…now how we justify their case to own an house?
well the reality prices were going up mainly in IT cities due to high saalries.the builder/landmafias/politiciencs made sure they cost 30-40 lacs.. people like me could not even dream of buying a small flat..hope the real estate market falls drastically my best wishes...
RE:well thats a great news....hope it happens
by Ram Krish on Aug 01, 2008 12:00 AM Permalink
Pointing finger at IT is a favorite passtime. But it is fraught with danger.
I have been in the IT industry for last 23 years! When I came into it, Infosys had a turnover of Rs 30 lakhs per annum (yes!!!) and their corporate office was a 20' by 20' house in Jaynagar 4th T block (and - keep this a secret - some of their directors used to ride scooters to work, just like all of us :). They worked hard, took risks, made wise decisions and see where they have reached. But they have cashed out and not many at their level in this business sees the same future from here onwards.
Not only IT, but its been exports that have led to this (seemingly) HUGE buildup of wealth. But people are making a BIG MISTAKE when they assume that this same kind of prosperity will last for next 20 - 30 years. The IBMs and Oracles are taking over the business and from now on the pressure will be on - to squeeze more and more and pay less and less. If you complain, your job will be outsourced to Vietnam or somewhere.
Anyone who is foolish enough to take on unbearable DEBT at high interest rates for long periods on the belief that he/she will have ever-increasing pay packets and ever-decreasing expenses is heading for sure disaster.
Wait for 50% fall in RE prices (from their 2007 peak). Wait for builders to do closing-down, clearance sale. Meanwhile save as much as you can and increase down payment to maximum. ONLY then can you feel safe and not like a Debt-slave.
RE:well thats a great news....hope it happens
by anil raut on Aug 16, 2008 08:20 AM Permalink
Completely agree with Ram who has seen rise and bom period! Young IT guys should take this as lesson learned...US and UK companies are not outsourcing because of India great culture but for cost factor ..and the moment they see better cost factor in any other countries (which is happening)..they will start outsourcing to new places...keep in mind we ave very few work which independant....we in fact support other economies in return get paid in dollars which due to its conversion factor get benifited quite marginally......this is not long lasting...
In the mean time...adjust in small rented apts , sae as much as possible (minimise multiplex and mall culture) by the time even builders will realise thier true value...and then you can buy with less loan liability.
RE:well thats a great news....hope it happens
by Allen on Jul 29, 2008 04:27 PM Permalink
ajay.... i'm IT guy...but let me assure you that even though we are earning high salaries, we are not causing this surge for demand. How can salaried person spend 50-60% of his earning on EMI ???
RE:well thats a great news....hope it happens
by johnson dsouza on Jul 29, 2008 05:20 PM Permalink
Agreed with u...This is just a propaganda against those who earn higher salaries….there might be some cases where due to huge expansion of IT companies At a particular place property prices gone up in the expectation that the IT people will now jump in and start buying properties at any rate….but my dear friends that is not the case and can’t be sustained….real estate also need consistent buyer from all the sections and not one time buyer from IT sector….
RE:well thats a great news....hope it happens
by ajay on Jul 29, 2008 04:35 PM Permalink
its sad but true why do you think reality prices in places like Hyd Blre ,Pune have gone sky high..I am an IT guy myself but cant imagine paying rs 4500/- psf for a palce which is 20 kms away from main city..buildesr themselves have said that they are targeting IT people..Builders have stopped making 1bhk flats you will find all flats are 30 lac onwards..in place like pune 3k-4k was the highest rate one could hear but places which are close to IT parks (outside city limits) builders are quoting 4k -5k only because of IT industry..i am not trying to blame IT people here
RE:well thats a great news....hope it happens
by Vijay K on Jul 29, 2008 05:08 PM Permalink
I know for sure.. One Raheja Tower in Andheri which is made some 8-10 years back still has a few flats to be sold.... But the rates are very high.. (Proves that Real estste prices are not calculated using Demand and Supply). Raheja does not care a damn about anyone he wants to make huge n more huge and still majestic bunglows for himself.. but will not come down even a single rupee on the PSF rates.
RE:well thats a great news....hope it happens
by Lavin Mansukhani on Jul 29, 2008 04:57 PM Permalink
The real estate prices in places like Pune have been propelled mainly by the IT industry. However, the prices have now spiralled out of control and even the IT people are finding the rates unaffordable.
RE:RE:well thats a great news....hope it happens
by Vijay K on Jul 29, 2008 05:14 PM Permalink
Yes..!!! Builders just want to create a environment where is looks like.. wjhat ever they build even before they build it.. is all sold out.. at huge rates... so that ppl buy in Panic.
RE:well thats a great news....hope it happens
by johnson dsouza on Jul 29, 2008 03:57 PM Permalink
Even IT people can't afford to buy an house in Metros like Mumbai at today’s rate...I just can’t imagine to go for 50 Lacs bank loan to buy an house where I can live with my wife and parents….some days back I read one property on sale advertisement in news paper….It was a 850 sq ft flat at Borivali and the owner was expecting 70 Lakhs….I could not just digest it…..
