Why buying a house is outrageously expensive

[mkrishna100]

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One with instinct of a gambler, have hope that things will improve and buy up distressed properties at rock bottom. Of course difficult to guess where is the bottom?

True many people have this difficulty in finding which is the real bottom ( for buying ) and which is the real top ( for selling ) . The difference between Ordinary and Extraordinary investors lies in understanding this difference . Master Investors enter when there is maximum pessimism and exit at maximum optimism .

In every distress I see oppurtunity.

You have to be careful here as not all distress assets are valuable just because it is cheap . If a rogue promoter builds his apartment in a land ( that was acquired by unfair means ) and also builds an apartment without proper building permits and if he is willing to give a 50% discount on the same then it is risky buying those sort of assets as once the law comes in to play your entire assets will be razed down ( eg. Campa Cola Society in Mumbai ) .
Same with stocks . In 2008 when there was a big stock market crash , a friend of mine who was himself working in Satyam told that satyam stock was undervalued and worth buying and acquired stocks in thousands only to find the entire company closing down next year and not only he lost his job but also the money invested in the satyam stock .

So in conclusion : Always better to get good assets ( stock or property ) even if you have to pay a premium for the same .Good things though do not come cheap but will be available for discount when there is a bearish scenario . If you are a short term trader then it does not matter much whether you buy good or junk but if you are a long term player better to focus on quality stuff at discounted rates than going for junk stuff even if it is available at a bigger discounts .

 

[vgane]

This is the prediction of a top industrialist"Harsh Goenka"

With better communication, IoT, e-shopping, driverless cars, real estate in urban areas will sharply fall in future.

Add conquering outer space to this list!

 

[auh]

Eventually, the cities would lose their allure. It would make better sense to have independepent houses where water and food security is available. Families with self-sustaining methods of agriculture (home gardening) would be secured the most.

 

[vgane]

Eventually, the cities would lose their allure. It would make better sense to have independepent houses where water and food security is available. Families with self-sustaining methods of agriculture (home gardening) would be secured the most.

True..There are many palatial farm houses that are constructed in Kerala along the Highways...It is a seamless connection of many towns that it is difficult to differentiate a village from town

 

[V.Balasubramani]

Here at NCR, it appears that buyers are at the mercy of builders.

How buying a flat became a nightmare in NCR

India’s biggest property market by volume has numerous projects stuck for years. What has led to this dismal situation?

Unsold inventory in the National Capital Region has hit a high of 267,000 units by the end of March 2016, according to property consultants. Photo: Ramesh Pathania/Mint--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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New Delhi: On a blazing hot Saturday afternoon in June, a group of people assembled in a small room in an under-construction building at Today Ridge Residency, Sector-135, Noida, a part of the National Capital Region (NCR) centred around Delhi.

The motley group, with people ranging from senior citizens to software engineers, had one thing in common. Each one of them has parted with a huge chunk of their savings to buy a home, which had not been delivered to them.

Most of them booked an apartment in the project owned by Today Homes and Infrastructure Pvt. Ltd in 2010.

The buyers were assured of delivery in about two-and-a-half years; it has been six years now and most are yet to get possession.

At some other projects by builders such as Unitech Ltd, Amrapali Group, The 3C Company, Gardenia Group and Jaypee Group, the wait for possession has lasted more than eight years.
Rajiv Kumar Goel, who works for a private firm, said he commutes every Saturday for five hours to and from Faridabad to join the group.

“I have to take leave every Saturday to come here and my company cuts that amount from my salary,” he said.

Today Homes, The 3C company, Gardenia Group, Amrapali Group and Jaypee Group did not respond to a Mintquestionnaire sent a day earlier.

The NCR, India’s biggest property market in terms of volume, has numerous projects such as Today Ridge Residency that have been stuck for years, with just concrete structures and minimal work on the ground.

A combination of lack of funds, rising debt, unsold inventory, a trust deficit among customers and incessant litigation have brought the sector to a standstill, with no takers for the flats under construction.

A Knight Frank India report released on 4 July said that new launches in the NCR have been in a decline since 2010 and have dropped by more than half over the last six years.

Property consultant Liases Foras said NCR has witnessed a rise in unsold inventory by almost 14% to hit a high of 267,000 units by the end of March 2016 and it will take around six years to sell them.

The rot began to set in during the early part of the decade. The residential property market touched a high in early 2010 with firms raising loans to enter real estate in pursuit of what looked like an unstoppable boom.

“In the last 4-5 years we saw everyone from every industry come to real estate. Shoemakers and milk packagers, Godrej, Tata and the who’s who of the world entered the business. But many of them are stuck now,” Omaxe Ltd chief executive Mohit Goel said in an interview.

Read more at: http://www.livemint.com/Companies/p...-buying-a-flat-became-a-nightmare-in-NCR.html

 

[mkrishna100]

A combination of lack of funds, rising debt, unsold inventory, a trust deficit among customers and incessant litigation have brought the sector to a standstill, with no takers for the flats under construction.

Very true . Yesterday I met a relative of mine and he told he purcahed an apartment in 2015 after selling one of his propertyin Chennai but he choose to buy an apartment with a small builder on the outskirts of Chennai ( i.e builders who construct 6-8 aparments on a plot of land with just 2 apartments in each floor ) and these people do a good job and give individual attention and complete the project in time and are also fairly priced ( of course there are some crooks in these small builders also )within a Km to where his apartment is , there is a huge apartment complex ( of some Prominent Builder ) with many towers and it is looking like a ghost building and he told it has been like this for many years and no idea how many apartments are sold , how many unsold but the fact is that the construction is stopped and it is looking like a Ghost Building while all the people in his small apartment complex have moved in and leading normal lives .So there is still space for genuine buying and selling among small builders but the big builders with their false promose have only resulted in this huge mess .

 

[vgane]

Each one of the investors is fighting some battle or other with the builder in the NCR...Most of the people have invested 80 t0 95% of savings in real estate..Many are servicing 2 or more number of oans...NCR is not end user led but mostly investor led...I happened to meet a hapless investor recently..He got booked a HIG flat of 2400 sq.ft for Rs 5000 Per Sq Feet in early 2012..He has taken a Rs 85 lac loan & is paying EMI at an average interest of 10% in last 4 years+...His tax outgo is about Rs 35 lacs.It means his property should be worth @ 6500 per sq ft....But market price has crashed & is Rs 4000 sq.ft...Net loss=Rs 2500/sq feet=Rs 60.00 Lacs..He is panicking now

 

[yesmohan]

I know several properties that are not fetching rent...Two newly constructed flats in Saligramam, Chennai in a good locality have no tenants...One for the past 30 months & other for 6 months...The person is frustrated...They have tried all means (dealer, website advertising...)

In all areas of Chennai, a lot of "To Let " boards are hanging.

Either the supply is more...........on account of a large expansion ...in building activities;

or the demand has come to stand still / decreasing trend..... as no intake in software industries and a number of software industries have migrated to Bangalore / Hyderabad.

 

[yesmohan]

Each one of the investors is fighting some battle or other with the builder in the NCR...Most of the people have invested 80 t0 95% of savings in real estate..Many are servicing 2 or more number of oans...NCR is not end user led but mostly investor led...I happened to meet a hapless investor recently..He got booked a HIG flat of 2400 sq.ft for Rs 5000 Per Sq Feet in early 2012..He has taken a Rs 85 lac loan & is paying EMI at an average interest of 10% in last 4 years+...His tax outgo is about Rs 35 lacs.It means his property should be worth @ 6500 per sq ft....But market price has crashed & is Rs 4000 sq.ft...Net loss=Rs 2500/sq feet=Rs 60.00 Lacs..He is panicking now

I remember reading one of the short stories written by R.K.Narayanan ( I have forgotten the tittle of that story as it was read some 40 years ago) wherein he humorous concluded with the version:

Fools build houses;and wise rent on them !

As such, do not calculate rate of return on buildings !!

 

[krish44]

If people let their flats to bachelors,single working women , they will easily get tenants.

Again restrictions like vegetarianism,religion can put off those with capacity to pay good rent

That requires change in mindset.

 

[mkrishna100]

If people let their flats to bachelors,single working women , they will easily get tenants.

Again restrictions like vegetarianism,religion can put off those with capacity to pay good rent

That requires change in mindset.

The only change in mindset is keep you rent 25% less than what the market demnads and you will get un-interrupted rent without any break . Problem is many people keep playing to the market and keep raising the rent as the market raises and when the market crashes their EGo is unable to let go and bring down the rent and so their apartments are always vacant . Good and decent tenants ( across all sections of the society ) are always available for a fair value which must be less than what the market demands .I had already mentioned earlier a relative of mine was increasing the rent of his sister ( vey ordinary apartment in the heart of Chennai ) and was also getting rent but then it started to get dry and he was struggling for more than 6 months and I told him that bring down the rent by 25% and see and he was shocked to see many people coming for the same .

 

[mkrishna100]

In all areas of Chennai, a lot of "To Let " boards are hanging.

Either the supply is more...........on account of a large expansion ...in building activities;

or the demand has come to stand still / decreasing trend..... as no intake in software industries and a number of software industries have migrated to Bangalore / Hyderabad.

Many new apartments have come up in OMR Road and most of the IT Crowd who were paying fancy rent have moved in to their own apartment in OMR and other areas closer to IT Parks and the current owners still expect the 'IT WALA" rent and as long as they have such an expectation their apartments will remain vacant and they have to understand the reality and bring down the rent to "Non IT Wala " standards and they will have many takers for the same .

 

[tbs]

Many new apartments have come up in OMR Road and most of the IT Crowd who were paying fancy rent have moved in to their own apartment in OMR and other areas closer to IT Parks and the current owners still expect the 'IT WALA" rent and as long as they have such an expectation their apartments will remain vacant and they have to understand the reality and bring down the rent to "Non IT Wala " standards and they will have many takers for the same .

hi

i have a house in ECR chennai....many tenants are IT WALA.....some flats are many IT GALS aa group....both rents are falling

down..many IT WALAS changing company/location too... but i leased to nationalised bank and manager is the tenant with

regular rent into bank a/c directly every month....no problem so far...

 

[mkrishna100]

hi

i have a house in ECR chennai....many tenants are IT WALA.....some flats are many IT GALS aa group....both rents are falling

down..many IT WALAS changing company/location too... but i leased to nationalised bank and manager is the tenant with

regular rent into bank a/c directly every month....no problem so far.

Bank Managers , PSU Employees will give you regular rent provided the rent you charge is within the rental benefits they get .The problem comes only when you hike the rent much more than what they are entitled for the rental benefits .

 

[mkrishna100]

Also there is a myth that all IT waals earn fat salary .Only 20% of IT Walas working for the Top IT Companies earn fat salary and rest earn only normal decent salary and not the big fat salary that everyone expects .

 

[krish44]

People in chennai believe in Aadi and this month from july 16th , no takers for one month.

Nor can marry anyone.lol

Life comes to a standstill in Aadi .

Only temples collections increase.

 

[mkrishna100]

People in chennai believe in Aadi and this month from july 16th , no takers for one month.

Nor can marry anyone.lol

Life comes to a standstill in Aadi .

Only temples collections increase.

Sorry Boss you are mistaken . No doubt in AAdi rent and buying properties , marriage will not take place but lot of shopping will take place as you get great discounts and yesterday we had a family get together of 50 people and a cousin of mine from abroad spent for a good lunch for 50+ of our family members and relatives .
So in Aadi : do shopping , visit temples , have family get together and so either you spend or enjoy others spending LOL .

 

[shankar09]

I am having 2 flats in OMR - Karapakkam nearby many landmarks and IT corridors doesn't fetch money from the day i took the possession.

 

[V.Balasubramani]

No doubt in AAdi rent and buying properties , marriage will not take place but lot of shopping will take place as you get great discounts and yesterday we had a family get together of 50 people and a cousin of mine from abroad spent for a good lunch for 50+ of our family members and relatives .
So in Aadi : do shopping , visit temples , have family get together and so either you spend or enjoy others spending LOL .

Yes.... Aadi , the tamil month is generally considered as an inauspicious month for starting new ventures, changing homes and the like. Over the past decade and more, to pick up sales during this time, store owners started announcing offers and this had now come to stay. Discount sales are nothing more than an eye-wash, sums up Rajan of Consumers Association of India.

Source: Aadi sale: how genuine is it?
Link: http://www.thehindu.com/news/cities/chennai/aadi-sale-how-genuine-is-it/article3726599.ece

 

[mkrishna100]

Each one of the investors is fighting some battle or other with the builder in the NCR...Most of the people have invested 80 t0 95% of savings in real estate..Many are servicing 2 or more number of oans...NCR is not end user led but mostly investor led...I happened to meet a hapless investor recently..He got booked a HIG flat of 2400 sq.ft for Rs 5000 Per Sq Feet in early 2012..He has taken a Rs 85 lac loan & is paying EMI at an average interest of 10% in last 4 years+...His tax outgo is about Rs 35 lacs.It means his property should be worth @ 6500 per sq ft....But market price has crashed & is Rs 4000 sq.ft...Net loss=Rs 2500/sq feet=Rs 60.00 Lacs..He is panicking now

At least is his apartment ready for occupation ?

 

[krish44]

Sorry Boss you are mistaken . No doubt in AAdi rent and buying properties , marriage will not take place but lot of shopping will take place as you get great discounts and yesterday we had a family get together of 50 people and a cousin of mine from abroad spent for a good lunch for 50+ of our family members and relatives .
So in Aadi : do shopping , visit temples , have family get together and so either you spend or enjoy others spending LOL .

My property advisor in chennai advised me yesterday not to expect any tenant for rent for one month.He is a local fellow. He should know

 

[mkrishna100]

My property advisor in chennai advised me yesterday not to expect any tenant for rent for one month.He is a local fellow. He should know

Yes I too accept that only that I said apart from rents , property deals , marriages all other activities go very well . Shops , Temples and Restaurants will be fully occupied this month .

 

[vgane]

At least is his apartment ready for occupation ?

Only structure is ready...The construction stopped a year back

 

[mkrishna100]

Only structure is ready...The construction stopped a year back

Then he is in a very big trouble .I doubt anybody will be willing to buy from him at this stage and moreover he wont even get any form of rental income from that apartment .

 

[vgane]

Then he is in a very big trouble .I doubt anybody will be willing to buy from him at this stage and moreover he wont even get any form of rental income from that apartment .

It is a sad state of affairs for those who invested in NCR market from 2011 onward!