I am convinced that there is a mafia out there of loan givers, steel manufacturers, cement manufacturers, etc. who want you to buy a house. I have been talking to a couple of builders, financers, investors….and frankly not convinced that the real estate market is any where near mouth watering levels.

Same is true for equity markets, but that is a different story.

Those of you who are sick of my real estate, gold and other sob stories should read the link provided below.

CAVEAT: do not even think of doing this exercise with Mumbai or Delhi prices unless you have a cardiologist somewhere near you….

http://www.fool.com/investing/general/2011/08/29/where-to-rent-where-to-buy.aspx

 

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  1. Real Estate is bought mostly for emotional reasons (but justified financially). Emotions include: Status, Ego, Satisfaction of owning a house (even-though EMIs may run for 20 years), wife’s pressure, parental pressure etc. Sometimes it brings in a forced discipline of paying EMIs – for those who have other indulgences.

  2. In NCR a lrge % of properties are booked by investors and not by actual end users.
    They will book by paying only a small amount in pre-launch and sell within months to another investor with some premium.
    Real Estate has actually become a tradable commodity and turnaround time is very short.
    As property reaches near to completion properties would have changed hands from 3 to 4 owners and the price would have inflated to absurd levels.
    I believe India is only place in world where you buy a property even before it is ready.

    Yesterday I was watching a Real estate program and surprised to see that all the property queries were posted by Women and that too for investment.

    No wonder a lot of house purchase is influenced by ladies in a house.

  3. “No wonder a lot of house purchase is influenced by ladies in a house”
    That’s why i always believe women should be kept out of investment decisions. Too emotional and impulsive to make mature investment decisions. This trend i have been noticing irrespective of whether she’s a working woman or not.

  4. I primarlily bought a house for self stay & tax advantage. 5 Years later, I have moved overseas and the tax advantage is not verymuch relevant to me as I repaid the loan. The option for me was rent or sell.

    For selling, faces several of legal complications. Each buyer bank was asking different set of documents. Arranging papers, running around government departments, prospecting and negotiation with buyer has become full time job. In south india, buying/selling a property from secondary market is too tough. Atleast this is my realization. In this context, returns and yields become secondary. Selling a 10 year old house is the biggest challenge.

    For most of the used homes, rental is the only option if owner moves to another city or country. We know the rental yields are too low < 2% in most of the cases.

    I realise today that I have not gained single paisa (may be underwater) and certainly not a wise decision to buy the house at young age during initial stages of the carrier.

  5. wife+Parents+friends+workmates+ daily advertisements all adding up advice about Realestate being the ONLY INVESTMENT….Will hold on.. blaming it all on SUBRA’s advice…(if subra says so then it must be right) LOL

  6. BTW

    if you dont have a property -you have been looked down in social -so peer pressure is very high

    but to quote -if your shoe maker advises some investment ,it is time to get out ,but not in

  7. Hi Subra,

    But the article provides the state of housing in US aka developed countries. Do they apply to a growing country like India where demand of space keeps on increasing day by day.
    Am I missing something here in my understanding?

  8. demand = willingness to pay AND ability to pay. Ability is a function of income. So if incomes do not go up, demand cannot – developed of developing does not matter. Housing demand is too artificial – see the houses locked up and NOT given on rent…

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