Aamani Group Dholera SIR . - Dholera is a town in Gujarat, India. Investment property in Dholera SIR, Residential Plot Property, Project Real Estate Investment In Dholera, Gujarat, India.
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I Do believe that the market would colapse, By looking at the below facts, assuming the average income of and Indian household today is Rs. 30,000, Take for simplification factor a family earns Rs. 50,000 pm so in the year we have Rs. 6,00,000.00, Now a bank normally sanctions 4-5 times the Household income in loans so, looking at 6 lacs x 5 = 30 lacs loan, amount, With a 10% interest rate this would Take 30 yaers to complete, then also the Emi would be around Rs.26,000.00, Say in this case also the bank sanctions 50 Lacs, then the EMI to be borne would be around Rs. 44,000 pm which is very high (considering a family also has other expenditures), So this person would definitely default on the loan, Now considering in City like mumbai, they ask assuming 80% in Cash as down payment, and then then bank sanction the maximum of 80% of the documented value, so other words the buyer has to fork out 100-64% = 36% of value before even taking a loan. So in figurative on a 1 cr, House, The Buyer has to put in 36 lacs initial amount, and get 64 lacs in loans which would be high in terms of earning capacity and to pay emi, explaination as above,
So in my opinion for the flat values to fall, The banks would have to move in / foreclose on all the defaulters, which would lead to a selling frenzy which coud lead to price fall. But again if the above calculation is to be correct, they do not worry as they know they have only sanctioned 64% of the house value. Further the RBI should also monitor those banks that ver lend i.e. sanction more than allowed percentage value of the flat value for loans and sanctioning beyond ones earning capabilty in terms of EMI payments. In the end it is always the bank that makes the money.
In places like Mumbai, the price of property is 3 times the actual asset value of the property. Some times up to 5 times.
This is like a swelling that occurs as a result of a disease and not as a result of genuine demand for housing.
The average house hold income in Mumbai is about 30,000 INR/month. At this price, a person living in Mumbai need to shell out 30 YEARS ( THIRTY YEARS) of his / her savings ( assuming 30% savings on gross income) to get a ONE BED ROOM apartment even in the suburbs.
So the prices are all 'black market' prices and will NEVER sustain. This is a fact.
It is true that the story has been doing rounds for over 10 years. But the fact of the matter is , the prices are not based on demand. They are jacked up and manipulated prices by CREDAI ( which acts like a syndicate for real estate business).
Nowhere on earth the property prices rose by staggering 1200% ( meaning they increased 12 times ) in a matter of a decade and half. So what costed say one lac rupees costs 12 lacs now. Or what costed 10 lacs costs 1.2 crores.
This is like a disease.
Another dangerous thing that had happened is all the wealth that had been created from IT and BPO was sucked up by the real estate. People , like sheep purchased dozens of flats ( investment). What they failed to realize is that they dumped their whole life's earning.
The prices in Mumbai for example are 3 times inflated meaning the actual asset value of a 1.2 crore apartment is 40 lacs. use any calculation method, you will arrive at this figure.
Finally, there are people who keep harping about RATES. Bhaav badega Bhaav badega. The fact of the matter is , no one gives a horse dump about rate these days. The current bulk of people who are purchasing properties are the end users and not investors. End users WILL NEVER , EVER EVER pay such astronomical prices. Why ? because if you buy a two bed room apartment in Mumbai today, your life's 40 year earnings are GONE.
So, people slowly but definitely realizing this real estate mafia like game. All in all, it is mathematical certainty that a massive crash will happen that will wipe out wealth of most households who spent their life's savings to get rich fast and bought over prices real estate.
Don't worry real estate price will not come down infact the price of real estate will increase in coming years i think minimum 100% increase of real estate price.
in next 2 to 3 years . Example: if a flat cost 8000 RS per sqft today in 2014/ then the price of same flat will be 16000 per sqft in 2017
In India it will not burst. The moment some builder does aggressive marketing saying i am selling for 1 lac less, people will run towards him with their money. So how will it burst
2013 has been tough for Real Estate Sector, hope year 2014 brings some good news for real estate sector,Thanks for the blog on property,it is very informative,as per the experts,Bubble is expected to burst by Nov.2014
This is the nice post and this post is really appreciable and informatics .I like this post too much.
Thanks a lot for sharing such a good source with all, i appreciate your efforts taken for the same. I found this worth sharing and must share this with all.
http://www.realvalue.in/web/flats-omr.php
i am from mumbai having job in a famous real estate company. i disagree with the people here blaming developers. the govt. here charges are increasing every day be it bmc or mhada. every personn in these dept are corrupt and demand absurd amount of money from developers.govt has inncreased ready reckoner rates and pro rata charges. its very difficult for a developer to gain profits. if he cant earn atleast 30%-40% on the amount he has invested how can he do bsiness and pay his interest to lenders , investors and banks, etc.the builder is also sffering because of new govt rules nd regulations, taxes etc. therefore the builder should not be blamed. the entire system is corrupt because of these politics.
With all due respect to the author. The India real Estate market does not reflect the growth of a country. It is true for the developed world. The Indian market is driven by greed and black money. As of date there are no real buyesr in the market as they cannot afford the 1 crore apartments. Even a highly educated professional cannot pay the EMI's. Its a frenzy between the investors, one feeding the other. This is not sustainable and like you said the Burst is inevitable.
To Book Plot Directly Contact Us On +91-8866333000,Or Email: contact@aamanigroup.com
So in my opinion for the flat values to fall, The banks would have to move in / foreclose on all the defaulters, which would lead to a selling frenzy which coud lead to price fall. But again if the above calculation is to be correct, they do not worry as they know they have only sanctioned 64% of the house value. Further the RBI should also monitor those banks that ver lend i.e. sanction more than allowed percentage value of the flat value for loans and sanctioning beyond ones earning capabilty in terms of EMI payments. In the end it is always the bank that makes the money.
This is like a swelling that occurs as a result of a disease and not as a result of genuine demand for housing.
The average house hold income in Mumbai is about 30,000 INR/month. At this price, a person living in Mumbai need to shell out 30 YEARS ( THIRTY YEARS) of his / her savings ( assuming 30% savings on gross income) to get a ONE BED ROOM apartment even in the suburbs.
So the prices are all 'black market' prices and will NEVER sustain. This is a fact.
One good analogy is recent onion prices. :)
It is true that the story has been doing rounds for over 10 years. But the fact of the matter is , the prices are not based on demand. They are jacked up and manipulated prices by CREDAI ( which acts like a syndicate for real estate business).
Nowhere on earth the property prices rose by staggering 1200% ( meaning they increased 12 times ) in a matter of a decade and half. So what costed say one lac rupees costs 12 lacs now. Or what costed 10 lacs costs 1.2 crores.
This is like a disease.
Another dangerous thing that had happened is all the wealth that had been created from IT and BPO was sucked up by the real estate. People , like sheep purchased dozens of flats ( investment). What they failed to realize is that they dumped their whole life's earning.
The prices in Mumbai for example are 3 times inflated meaning the actual asset value of a 1.2 crore apartment is 40 lacs. use any calculation method, you will arrive at this figure.
Finally, there are people who keep harping about RATES. Bhaav badega Bhaav badega. The fact of the matter is , no one gives a horse dump about rate these days. The current bulk of people who are purchasing properties are the end users and not investors. End users WILL NEVER , EVER EVER pay such astronomical prices. Why ? because if you buy a two bed room apartment in Mumbai today, your life's 40 year earnings are GONE.
So, people slowly but definitely realizing this real estate mafia like game. All in all, it is mathematical certainty that a massive crash will happen that will wipe out wealth of most households who spent their life's savings to get rich fast and bought over prices real estate.
in next 2 to 3 years . Example: if a flat cost 8000 RS per sqft today in 2014/ then the price of same flat will be 16000 per sqft in 2017
Thanks a lot for sharing such a good source with all, i appreciate your efforts taken for the same. I found this worth sharing and must share this with all.
http://www.realvalue.in/web/flats-omr.php