Not a single day goes by without some conversation about the property prices in Bangalore. Though Kaps has made a comment about the prices in Chennai, I think Bangalore is way ahead of Chennai in the hype.
Now that I have had a respectable run of around 4-5 years of 'corporate experience', I find that most of my peers are now talking more and more about the next level of activities in the cycle of life more so in India - marriage, buy a house, a car blah blah...
But the kind of prices that I hear scares the shit out of me. The basic number that I have been hearing is 35 lakhs min for a 3 Bedroom apartment. That is like a loooot of money and I know for a fact, that almost all apartments get signed up for even before the first stone is laid.
If this is not hype, I dont what is. Many of my friends who have invested in property in Bangalore over the past couple of years have seen close to 100% or even more appreciation which is great for them. To add to this huge hype are the stories of builders cheating naive software professionals.
All this gives me the jitters!! To me, all this is an indicator of an impending correction in the property market at least in Bangalore. I think it is just a matter of when and my gut tells me, it is going to be sooner rather than later.
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7 comments:
At first, I was also reluctant to invest in a property. Finally I decided to invest in one after listening to people around me.
Apartments / flats don't appreciate much....the appreciation u r referring to might be a result of the land value going up.
From a pure investment perspective I still feel that land is the best bet.
That could be. But I think the reason these apartments sell so much is also due to the tax breaks the salaried class is getting as a result of this.
The fact is that whether it is land or the apartment, the inflation is very much hyped....
There is an upper limit on the tax breaks.......hence the tax breaks can't justify the purchase of such expensive apartments.
Given the easy availability of finance and also the lack of other investment avenues, people are buying more properties.
I heard in Bangalore, the areas around the IT companis hv gone up in terms of price. One of my singapore friend from bangalore, who bought a landed property for 25 lakhs few years back (on loan), can float around now.
But I feel the correction is expected anytime, since the global prices are also crashing. In US, the bubble is expected to be burst anytime... read the latest 'The Economist' edtion.
real estate bubbles even if they burst will not hit you hard like shares :)....but, bubble burst will signify that more rational decisions are made in the future....
A couple of weeks back, paul krugman commented on how the US property price bubble, built up by the fed's interest rate regime should bust any time.
Some of the prices in Indian market are caused by genuine shortage of available places to stay - e.g. NCR/Bangalore.
Most places are definitely in a grip of some builder/trader nexus. You can buy at a high price, but may not be able to offload in the same price range.
I am not even sure if the mad purchase spree is prompted by lack of space. In many cases, folks who were content living in rented accomodation are now prompted to take loans since the interest rates are so low. Also, a lot of NRIs are investing (especially from IT) because there is more movement to India from US and Europe. All this is just taking the prices sky high
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