Real Estate prices in India have seen a serious dip over the past few months. But are the prices sustainable at the current levels or are they gonna observe a sharp fall from here?
Lets look at some data first. Prices in Mumbai in not way back in history but very recetly in 2005 (source Times of India archives for Mar 2005, all prices in per sq ft):
Cuffe Parade - 11-14k
Worli - 6-10k
Wadala - 2.7-3k
Chembur - 3.5-4.5k
Mulund - 2.4-3.5k
Bandra W - 5.5-10k
Andheri W - 2.8-5.5k
Goregaon W - 2.2-3k
Mira Road - 0.65-1.2k
Question is whether the 2005 price can ever come back?
Current factors:
- global equity markets falling
- job losses, less nri money, dip in consumer demand = no liquidity in markets
- this time the bonus/salary of all bankers in city have dropped 60-80%
- current sale volumes of developers is less than 10-20%
- customers backing out from existing deals where 10-20% was stuck (as the prices have fallen below that)
- no foreign funds investing in india currently
- to top the all - very negative perceptions in the market
Overall it looks like that the markets wont rise from here in next 2-3 yrs - which means that the carrying cost (if someone invests today vs invests after 2 yrs) is around 20-25% - huge for individuals.
Lets see the trends. Keep posting what you get as a feedback from the markets.
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Agree. I would like answers to some questions:
ReplyDelete1) Any idea of what the real sales are?
2) Why are newspapers advertising all the time that this is a good time to invest?
3) If prices have increased more than 100% (200% in some cases), why is it that various experts are looking at a 15-20% fall as being the maximum that the market will come down?
4) In this age of job insecurity, how can anybody commit to take huge loan liability, even if loan interest rates come down..
15-20% fall is surely not the end of the game. Its just the beginning. When the prices were rising, people said 20% up is maximum, but it went up till like 100-200% rise.
ReplyDeleteI think its gonna go down 50% further from here. should reach 2006 levels if not 2005/04.