[DudeWithaFiat]

Originally Posted by m8002?

Great post by Ashokrajagopal.
Another aspect that fed the demand is people buying multiple houses as investment. In some growing cities like Bangalore, there are opportunities for rent. If not its a dead investment.

I still don't see how people are okay with the idea of spending a huge amount as initial downpayment and then paying a monthly EMI of 60k, to get a rental income of 20 to 30k. I will not buy an apartment as an investment, I would buy an apartment only if I plan to settle down at a place for long term - more as a home than an investment. For investment, I would buy a small piece of land somewhere in a Tier 2/3 city.

If you ask me, apartments, unless they are located in hot location in the city, are a depreciating asset.

[B103]

Originally Posted by DudeWithaFiat

I still don't see how people are okay with the idea of spending a huge amount as initial downpayment and then paying a monthly EMI of 60k, to get a rental income of 20 to 30k. I will not buy an apartment as an investment, I would buy an apartment only if I plan to settle down at a place for long term - more as a home than an investment. For investment, I would buy a small piece of land somewhere in a Tier 2/3 city.

In the Sarjapur outskirts of Bangalore, many villa projects are coming up. Prices had reached 1.2+ Crore at this place and premium projects command even more. But, if you try to rent out such villas, the rent that you get is somewhere between 8,000 to 10,000 Rupees. This indicates the presence of black money in the system because if somebody has money they can keep it in bank and earn more without risks.

Another typical case is Kerala. In 2000s, Kerala had a red hot real estate market. Prices in small towns in Kerala at that time were comparable to that of Bangalore. Then the container money was curbed, demonetization kicked in and scores of NRIs has now started to return. There is no demand for real estate now. It was clearly a bubble.

Some people were lamenting in this thread that they waited long but could not see a bubble coming by. That may be the case in Indian cities. Things are a bit better in metropolitan cities. When people move in to cities in search of jobs, they may bring moolah (black or white) from their home town. There is a shortage of land in the cities in general and people migration is happening across all stratum of the society. Bubble may sustain or may never burst if builders collude on the price.

As a piece of advice, If somebody is buying apartment projects, check how many sq feet of undivided land is included along with the apartment. Poorly maintained buildings may depreciate rather quickly but land price in general would not go down that fast.

[NiInJa]

Originally Posted by DudeWithaFiat

I still don't see how people are okay with the idea of spending a huge amount as initial downpayment and then paying a monthly EMI of 60k, to get a rental income of 20 to 30k.

Actually, there is a completely different perspective of buying a flat that exists in middle class salaried people, including me.

Flats are assets which are bought considering not just our current lives but the generations that follow us. For example, I have a 1 year old kid now, I have a flat big enough to raise him, but when he grows up and decides to have a family, I will probably have to move out and to make his life easy I can buy another house right now, pay an emi as I can afford to and let the property on rent. So when its time for me to leave the world, he can have two properties already and hoping that he would grow wise, would invest in more property then or use these assets whichever way he wants (start a new business etc ) Thats how wealth in a family would keep growing. In some cases, people having two kids would buy two assets for equal distribution at the cost of their own standards of living.

[Durango Dude]

The message here is for us to enjoy what we earn and not to invest in property as financial cushion for the future; an apartment after 10 years is just like your car, it's old and the housing loans are expensive and by time the loan is payed off the what essentially a ₹ 40 L apartment has almost sucked up ₹ 60-70 L of your hard earned money. So in the bargain you loose money. If you invest in land then you better look after it and if you don't build a wall and identify your land when the topography changes it may have been grabbed or encroached upon leading to litigation and plenty of heart burn. So people, go abroad on jaunts and buy that car you've been eyeing don't be too "prudent" and invest in property, to regret later. The property you own must be the roof over your head.

[DudeWithaFiat]

Originally Posted by NiInJa

Actually, there is a completely different perspective of buying a flat that exists in middle class salaried people, including me.

Flats are assets which are bought considering not just our current lives but the generations that follow us. For example, I have a 1 year old kid now, I have a flat big enough to raise him, but when he grows up and decides to have a family, I will probably have to move out and to make his life easy I can buy another house right now, pay an emi as I can afford to and let the property on rent. So when its time for me to leave the world, he can have two properties already and hoping that he would grow wise, would invest in more property then or use these assets whichever way he wants (start a new business etc ) Thats how wealth in a family would keep growing. In some cases, people having two kids would buy two assets for equal distribution at the cost of their own standards of living.

Are you agreeing or disagreeing with me?

This was the point I was trying to make - that apartment is not an investment - as in you buy it for Rs.X , wait a few years and sell it for Rs.1.5*X. You buy it as your home.

[Avenger_123]

Originally Posted by DudeWithaFiat

If you ask me, apartments, unless they are located in hot location in the city, are a depreciating asset.

My take on this is, real estate has been an emotional investment for such a long time in India. Especially family elders always believed in Gold and Land. Gold is highly liquid and land an immovable asset that can be passed generation to generation. I agree flats depreciate, but the overall inflation generally takes care of it, rent is just additional icing on the cake.

I have not heard of prices going down a lot, there are too much at stake as explained in earlier posts. A few years back 1 Crore was an unimaginable amount, now for a decent apartment in a city like Bangalore you need to cough that much out, there is no other option - people need houses. In another decade this will be 2.5 to 3 crore, due to inflation and increasing purchasing power, of course, this assumes the economy keeps growing - which I believe will be the case in the long run, minus the short term challenge we are facing now.

The bigger question is where do people invest, you can't keep money in the bank due to meniscal interest rates and tax issues. Stock market is a risky proposition in India, I have MF's which are pretty much same value for the past 3 to 5 years, add to that the horrible corporate governance standards in India mean investors are always at a loss, look at Ranbaxy, Essar and Reliance recently, people have lost so much of there hard-earned money. You might as well have something you can touch and feel vs giving your money to some corporate honcho who am not really sure has my best interest in mind. Things are different though in other mature markets like the US where corporate accountability is treated very seriously.

For apartments, if you buy from a decent builder it is an asset which is a symbol of "wealth" as well as in Indian context, especially useful for the next generation. Assuming they don't need it, you can sell or reverse mortgage to fund your retirement if needed, assuming the city you brought in continues to grow. The risk is obviously accessing the future value of the investment.

Villas in city outskirts is a good proposition if you can afford it with land registered in your name, with opportunity to modify the house in the future if needed.

[parth.jain]

So far what I have witnessed is there is an appreciation in prices of villas/flats of reputed builders who are offering good quality construction and maintenance, but that is very very rare. 2 years back there were villas available in Greater Noida from a certain builder for around 75-80 lakhs, but now the price seems to be around around 1.1Cr+.

And if you look at Delhi, someone I know is trying to sell his ancestral property in Old Delhi for a few years but couldn't do so due to family disputes. In the last 2 years there is a decline of around 20% in the value of offers he is getting and currently for the past 3 months there is absolutely no buyer!
In all over Delhi, there has been no appreciation of prices in property as far as I have observed in the past few years (4-5 years).

[k_kumar]

Originally Posted by Avenger_123

... you can't keep money in the bank due to meniscal interest rates and tax issues.

Failed to comprehend this point fully. What tax issues are there if you park your money at bank?

[V.Narayan]

Very soon all existing and future properties will need to be linked to Aadhar. Plus RERA will get more teeth to go after errant builders. Plus metro rail in the largest 20 odd cities will open up more spaces with access. In my view all these mean the long term trend for price of an apartment is downwards as it should be. Starting with the notorious Urban Land Ceiling Act politicians have worked hard to manipulate availability of land and through regulation the supply of apartments. As a long term trend a lot of that is unfolding now and will, in my opinion , unfold further. The softness in prices we are seeing now is not another cycle but a more permanent shift of the entire price curve.

[neeraj0272]

Originally Posted by saisree

]The change has to come from both the buyers and sellers to make the purchase process as transparent as it can and pay the nation its right dues.
.

Instead of blaming employees(buyers and sellers here) as lazy, we have to blame management(Govt here) that why didn't they formulate such policies which incentivized the employees to work harder.

Why do citizens of our country keep on smoking this pipe of pseudo-nationalism when it's a fact that ours is one of the most corrupt country. What is black money? Its just money on which taxes have not been paid. Now a govt can, and in India it does, raise and lower taxes arbitrarily thereby increasing and decreasing the quantum of black money arbitrarily. It doesn't mean that people who have earned this 'black money' worked any less harder for it and this money is less 'worthy' . This money is doing its role in the economy. Keep in mind that India is a developing country and informal economy is a major part of it and formal economy shouldn't and can not wish away informal economy.
Demonetisation tried to do away with it but look at the end results now. Economy is at a stand still.
In the context of property registration, 7% registration duty is huge considering the high value nature of property transactions. Add to it 33% income tax. So if you want to buy a property valued at 1 cr, you will have to earn 60Lacs extra for paying taxes. And if you buy this property under the radar of the govt, one can straightaway save this 60L. So now tell me who is to blame for this corrupt practise? If instead of taxes of 60L, it would have been 20L then most people would not bother with black money.
Govt should take responsibly for this black money in the sense that it should come up with reasonable taxes which people are able and willing to pay.
We all know that most of our tax money is going to waste and govt is not spending it judiciously.
Just look at LIC and SBI. Another huge scandal in making but this time with public's tax money.
So instead of pinning unreasonable hopes on fellow countrymen, we should ask questions to govt which includes the so called brightest of the country (IAS, IPS etc.) that why have they failed to deliver reasonable policies to eliminate black money.

[CarJunki]

Any residential property is a liability. Even land is a liability.
This is my personal learning from life.
As the previous generation grows older, the responsibility of maintaining a property gets heavier and heavier. Newer generation moves (or keeps moving) to different places.
Society maintenance charges are now going through roof and will continue to rise as major cost components are driven by labor, fuel and water. None of which will become cheaper in next few decades. The place where i stay (and own) monthly maintenance has reached 50% of the EMI I used to pay.

Even if one buys property in one of the growing cities, traffic situation will become such a hazard that it will make more sense to stay on rent at walking distances from work places.
Some of my friends who own apartments in Koramangala stay on rent in Whitefield close to their offices and have also registered kids in schools nearby.

The stability of jobs is non existent and longevity of carrier is rapidly reducing. Almost all industries and sectors are now facing shortening of maturity times. When a sector matures, there is loss of well paying jobs. The hit is always highest for well paying jobs.


So anyone planning to buy a house now, please consider a lot of variables and buy only if you are able to close the loan in less than 5 years. Because if you are just starting a family, you probably have income visibility and stability for next 5 years.

[lazy]

An apt article that was published on Mint yesterday. It's a long read, but really insightful.
Speaks about some points that have been mentioned in this thread already esp. on the financier-politico-bureaucrat nexus.

https://www.livemint.com/news/india/...004165054.html

The apartment prices aren't falling because all the monies put into the projects by builders/financiers are from Banks and FIs, and not their own. With the new relief package of INR 25 K cr announced, we know where all this Tax collection money is going to go; many connected people are going to become much richer, and hardly any of the stalled projects are going to be completed.

The RE sector is in a crisis of its own making, much like the auto sector slowdown.

cheers
lazy

[Hells Bells]

I went around Bangalore hunting for a 4 BHK over the past two months for self use. I do not have an immediate requirement and I am happy to wait. However, what truly surprised me is the way what used to be CBD rates have moved to the "suburbs" like International Airport area. What I also did see was that now discounts are being quoted as a part of initial quote itself. I never thought I will see a day like this in a property crazy market like India. This included even the ready to move in properties.

However, the prices are still crazy and while discounts are in, it still is a case of discounting uplifted prices. Would I want to hold my retirement hostage to their crazy pricing? Absolutely not. Especially when my initial abode is already accounted for.

I ran into row house/villa projects where most of the houses were empty even though they were sold and the sales guy would tell me that most of the investors are in US. I would then hear them roll out discounts given my expression of interest and would think of the poor suckers who bought it thinking it has appreciated even as the on-ground transactions are being discounted.

I have never seen property to be a great investment vehicle when seen from a CAGR lens and current market only reinforces it.

[Avenger_123]

Property buying is one thing, add monthly maintenance charges and I keep thinking how do you afford it after you stop working. We looked at a villa in SJP road current maintenance itself was around 11k per month. Add future water tankers and I can't imagine how it can be sustained.

I do see lot of discount, but as you mentioned these are again on the inflated prices that builders have quoted knocking as much as 15 to 20%. This tendency is less though with reputed builders as of now.

[Sebring]

There was a time, buying property made sense. In 2000-2005 prices were around Rs. 7 to 10 lakhs and people lived in those with their families for 10 years, and sold for 35 lakhs (so they literally lived rent free and made capital appreciation). Now if they have retained those flats, the monthly rent they fetch is Rs. 20,000 - so it made very good sense. I'm talking real figures here. These days, if you buy a property north of 70 lakhs, the rents are around Rs. 35,000, monthly maintenance is Rs. 5000 (plus water tanker). Then when you want to dispose it, ridiculously low amounts are quoted because demand is low and you actually end up with a loss. Salaries have not climbed fast, and affordability is a real issue here. Land has its own set of problems regarding paperwork, maintenance charges etc and you have to guard it well. When you see all these factors, Gold, (as an investment), will always hold its value. Be it in physical form or on paper.