Monday, November 03, 2008

Saneprice.com

I came across this web-site SanePrice.com which can be used as a good tool to share information about housing/plot prices in various locations of India. It uses the same principles used by Digg.com and other crowd-sourcing websites which attempt to figure out the consensus opinion, based on a large set of users. Once this site gets traction, the data will be a valuable set of unbiased information. I urge all readers to update as much information as they can, about plots/apts and rentals. Kudos to Anand for this endeavor.

28 comments:

Anonymous said...

50% drops coming. Massive layoffs are coming. More than 25% coolies from the IT majors and 50% from financial majors will lose jobs. Salaries for existing employees will be reduced.

Anonymous said...

Who is wasting time to find out the prices in recession time ? Is it an attempt to convince the buyer that lot of people agreed on this price so you must pay it ?
The expected correction is 50% down, which don't require any survey.

The current stock market rally is driven by trader to take out their position, the fundamentals are still weak for next 1 year.

http://news.bbc.co.uk/2/hi/business/7705603.stm

Saneprice said...

Thanks Vik. Appreciate the help.

@Anonymous2

Any data is good, don't you think? When do you figure the prices have bottomed out?

As a buyer, won't you feel empowered if you knew the going rates around the area so you could bargain better?

Anonymous said...

saneprice:
The price to buy is when the rents are almost similar to monthly EMI with a 20% down payment. If the house rents for Rs. 10, 000 the monthly payment should not exceed more than Rs. 13-14 thousand per month. Now do your math how much should be the price.

It is not rocket science that thousands of people are using their brains.

Saneprice said...

@Anonymous:

At the prices you suggest, you won't be able to buy anything within Bangalore city limits or immediate suburbs, even if the prices fall 50%, any time soon.

The Rent vs Buy ratio in India is totally skewed - your math won't work.

Given that - yes, you wouldn't find use for www.saneprice.com. However, for those who *are* interested in buying a home, it would be a good place to research prices.

Now, you can question who in their right minds would ever buy a home in Bangalore and not rent for their entire life. It is a very valid question - and a very valid solution to this madness.

If more people had thought that way, we won't be here today.

Observer said...

According to the following article, builders are making margins of between 70-80% on luxury properties, and 30-40% on mid-income properties. So those 1cr apartments may actually cost the builder only 20 lakhs to build! No wonder builders can continue to hold prices high since they have already made break-even by selling only 20-30% of the flats in a project. In a large project economies of scale allow them to achieve these extraordinary profits.

http://economictimes.indiatimes.com/News_by_Industry/Mid-income_homes_boost_DLF_topline/articleshow/3670526.cms

Real estate major DLF reported a 15% increase in its topline for the second quarter of the year 2008. This was driven by the higher volumes contri
buted by the growing mid income housing segment. The total share of this segment has grown from being negligible to about 65% of the total non DLF Assets (DAL) turnover in this quarter.

The company sold a little over 3.12 million sq ft in this segment. Currently, 64-million sq ft of space is under construction.

On a year-on-year (YoY) basis the gross profit margin declined by 800 basis points (bps). This dip in overall gross margins is due to lower margins in this product. It is between 30-40% as compared to the premium segment, which has 70-80% margins. This had a pull down impact on the PAT margins, which declined by 4%. Liquidity crunch raised finance cost of the company by more than two times.

Observer said...

The following is an article about the oncoming severe recession in America. The growth of the emerging economies in large part has been due to a huge credit bubble which had its epicenter in America. It also talks about other bubbles in history. Very informative reading, and highly recommended!


http://www.moneyandmarkets.com/the-great-american-housing-nightmare-next-phase-27880?ref=patrick.net

Guru said...

hi guys..
this is the interesting article i found from
http://trak.in/tags/business/2008/10/17/pune-real-estate-bubble-story/

This is how bubble builds up !

STORY OF PUNE REAL ESTATE

Once there was a little island country. The land of this country was the tiny island itself. The total money in circulation was 2 dollars as there were only two pieces of 1 dollar coins circulating around.

1. There were 3 citizens living on this island country. A owned the land. B and C each owned 1 dollar.
2. B decided to purchase the land from A for 1 dollar. So, now A and C own 1 dollar each while B owned a piece of land that is worth 1 dollar.

The net asset of the country now = 3 dollars.

1. 3) Now C thought that since there is only one piece of land in the country, and land is non producible asset, its value must definitely go up. So, he borrowed 1 dollar from A, and together with his own 1 dollar, he bought the land from B for 2 dollars.
* A has a loan to C of 1 dollar, so his net asset is 1 dollar.
* B sold his land and got 2 dollars, so his net asset is 2 dollars.
* C owned the piece of land worth 2 dollars but with his 1 dollar debt to A, his net residual asset is 1 dollar.

Thus, the net asset of the country = 4 dollars.

1. A saw that the land he once owned has risen in value. He regretted having sold it. Luckily, he has a 1 dollar loan to C. He then borrowed 2 dollars from B and acquired the land back from C for 3 dollars. The payment is by 2 dollars cash (which he borrowed) and cancellation of the 1 dollar loan to C. As a result, A now owned a piece of land that is worth 3 dollars. But since he owed B 2 dollars, his net asset is 1 dollar.
* B loaned 2 dollars to A. So his net asset is 2 dollars.
* C now has the 2 coins. His net asset is also 2 dollars.

The net asset of the country = 5 dollars. A bubble is building up.

1. B saw that the value of land kept rising. He also wanted to own the land. So he bought the land from A for 4 dollars. The payment is by borrowing 2 dollars from C, and cancellation of his 2 dollars loan to A.
1. As a result, A has got his debt cleared and he got the 2 coins. His net asset is 2 dollars.
2. B owned a piece of land that is worth 4 dollars, but since he has a debt of 2 dollars with C, his net Asset is 2 dollars.
3. C loaned 2 dollars to B, so his net asset is 2 dollars.

The net asset of the country = 6 dollars; even though, the country has only one piece of land and 2 Dollars in circulation.

* Everybody has made money and everybody felt happy and prosperous.
* One day an evil wind blew, and an evil thought came to C’s mind. “Hey, what if the land price stop going up, how could B repay my loan. There is only 2 dollars in circulation, and, I think after all the land that B owns is worth at most only 1 dollar, and no more.”
* A also thought the same way.
* Nobody wanted to buy land anymore.
* So, in the end, A owns the 2 dollar coins, his net asset is 2 dollars.
* B owed C 2 dollars and the land he owned which he thought worth 4 dollars is now 1 dollar. So his net asset is only 1 dollar.
* C has a loan of 2 dollars to B. But it is a bad debt. Although his net asset is still 2 dollars, his Heart is palpitating.
* The net asset of the country = 3 dollars again.
* So, who has stolen the 3 dollars from the country ? Of course, before the bubble burst B thought his land was worth 4 dollars. Actually, right before the collapse, the net asset of the country was 6 dollars on paper. B’s net asset is still 2 dollars, his heart is palpitating.
* B had no choice but to declare bankruptcy. C as to relinquish his 2 dollars bad debt to B, but in return he acquired the land which is worth 1 dollar now.
* A owns the 2 coins, his net asset is 2 dollars.
* B is bankrupt, his net asset is 0 dollar. ( he lost everything )
* C got no choice but end up with a land worth only 1 dollar
* The net asset of the country = 3 dollars.

************ **End of the story; BUT ************ ********* ******

There is however a redistribution of wealth.
A is the winner, B is the loser, C is lucky that he is spared.

A few points worth noting -

1. When a bubble is building up, the debt of individuals to one another in a country is also building up.
2. This story of the island is a closed system whereby there is no other country and hence no foreign debt. The worth of the asset can only be calculated using the island’s own currency. Hence, there is no net loss.
3. An over-damped system is assumed when the bubble burst, meaning the land’s value did not go down to below 1 dollar.
4. When the bubble burst, the fellow with cash is the winner. The fellows having the land or extending loan to others are the losers. The asset could shrink or in worst case, they go bankrupt.
5. If there is another citizen D either holding a dollar or another piece of land but refrains from taking part in the game, he will neither win nor lose. But he will see the value of his money or land go up and down like a see saw.
6. When the bubble was in the growing phase, everybody made money.
7. If you are smart and know that you are living in a growing bubble, it is worthwhile to borrow money (like A ) and take part in the game. But you must know when you should change everything back to cash.
8. As in the case of land, the above phenomenon applies to stocks as well.
9. The actual worth of land or stocks depend largely on psychology

Phew…that was some explanation :)

Guru said...

read this also... from the same link..
America is a monster economy. If you come here and see - there is no panic or mayhem in the crisis. Americans are ingenious and have immense amount of natural resources, land and the worlds best infrastructure. They can simply rebuild their economy based on the strength of the US$. The entire world treats the US $ as equivalent to gold - so please don’t underestimate the US economy. US has hard working smart people - who come in to work at 8 am everyday, work their full 40 hours a week and run their families. The quality of life the average American even in deep crisis is much much above even the richest folk in India.

Sukhminder, your point that people without land are homeless in this example is wrong and so is the point of exchange value of the dollar. We can easily assume in this example that A, B, C are all self sufficient/have government housing or can live in rental homes and are playing this game for investment and likewise a dollar is nothing but a Gold coin - whose value is fixed - Gold is Gold is Gold. (As long as someone turns up with a platinum coin).

Now to put it in terms of Indian real estate bubble - here is the scenario -
1) IT professionals (or allied industries) started earning money in US$ (1500 US$ pm is a good pay in India). Note that this is Outsourced money [platinum coins in Gold Coin economy]
2) Newly joined IT workers - start purchasing property (Bubble not built yet) by taking reasonably priced Bank loans in Gold coins.
3) Builders build and sell houses and make some 10-15% standard profit
4) IT worker pays off the loan to bank - converting the .

- Enter the speculator/”investor” - whose purpose is to make profit in this demand supply system
In an ideal greedless economy, the builder would have been happy with his/her profit of 15% and would continue the system. But looking at the high demand for buying (as IT companies are hiring year after year), and inflation the prices are cranked up and a hype is created saying that only X number of units remain (although more are available). Builder says his profit will increase, speculative buyers want to buy cheap and sell off at a profit.

1) Fearing losing a good deal, many IT workers take loans (remember as long as they are are not fired they can pay back the loan) and buy houses at increasing prices.
2) Speculative buyers buy homes to sell them off at a profit - they say worst case they can rent it out
3) Banks report robust growth - and ease lending. Builder still needs to deliver the house, so they also borrow money from same bank/ from stock market - IPO and build for the consumer. - Builder is confident that sale of the homes will get him his profit even after he pays off the loan to bank.

The bubble grows by such speed that the land that once cost 10 pieces of gold will be priced at 10 pieces of platinum.

The net asset value of the land is in fact 10 coins + inflation - the price the buyer must pay must be 10 coins + inflation adjustment + builders profit + interest to the bank.

All this “Growth” keeps on inflating the bubble - the Workers and builders lend money from the bank and pay each other. If the worker thinks - hold on a second, why am I paying 10 platinum coins for a house worth 10 gold coins then he should have avoided the deal after all. But he followed the crowd and took a loan of 5 platinum coins. (his payments/EMI now soar). Then alas the reality strikes. Demand stops as the companies halt hiring or shrink pay packages - as the platinum coins are drying up. If the worker has enough to bail himself/herself out - its fine. (They still think their house is worth 10 platinum coins). If not - Houston we have a problem.

The land value will not appreciate beyond 10 platinum coins, as that would mean no one would buy it in hard times. Workers with loans who are laid off/ have lowered salaries are in deep trouble - their homes value is come to a standstill/reduced and their loans ares still the same.

This bubble has a bad story for any non platinum worker who was earning in gold - and got a loan for 10 platinum coins. thinking that his investment will yield enough to repay it.

Now what about the winners or losers in this game? Builders or buyers if they default on their loans will lose property to the bank/lender. If they do that - banks will collapse as they will have a worthless 10 gold coin house for which they lent 10 platinum coins. (As it happened in USA).

But in India the story is different -
For Workers/buyers there is a shame in not repaying your loan back so the workers will have to toil their way to repay a loan - cutting down on other expenses - slowing down other sectors. If they lose jobs and cant get another one - they are screwed and so are the banks who will repossess the houses.

Builders cannot start new projects and will unwind slowly hoping for a revival - they will try to repay the loans if possible by cutting down their margins. Builders who aren’t in a position to do this are screwed and so are the banks who lent money to them.

So there will be deflation of the bubble than a bursting (US it completely burst taking down the banks - who had invested this “asset value” in other countries - hence destroying those countries as well). In India I dont see a burst but a phussss. If jobs dry up n IT there is no real growth possible. This is a classic case of torturing the hen that lays golden eggs until it one day starts laying normal eggs. If the bubble was exposed earlier (learning from the 1997 bubble), smart people would not be in debt now. Those who are in debt are going to be the biggest losers in this game.

Basically this is what happened in 1996-97 collapse - that time there was a speculative bubble led by the Gulf money - this time it was US money.

Abdulla said...

Go site-seeing
By: Savie Karnel
Date: 2008-11-04

Bangalore:

This is the time to zero in on your dream house and buy it, thanks to the downturn which allows you to negotiate with the developer.

"Transactions in the market are not happening the way they used to happen. Developers are waiting for buyers. It is the right time for those interested in buying. They can check it out, and maybe even negotiate," said Irfan Razack, chairman and managing director, Prestige Group.

Right time to buy

As for the costs, Razack feels that they have stabilised. "In Bangalore the rates have stabilised. As per the present scenario, I don't see the cost escalating. It will remain the same. But you can't say with the market changes," he said.

Balakrishna Hegde, former president of Confederation of Real Estate Developer's Associations of India (CREDAI) and MD, Chartered Housing, said that the prices in Bangalore were reasonable compared to other cities and hence there should be no reduction.

"Real estate prices in Bangalore have stabilised. In Mumbai, a property, that is 45 km away from the Central Business District (CBD) costs Rs 6,000 per square feet. In Bangalore even 10 km away from the CBD the cost is Rs 3,000 per square feet. Now, you will not get any property in the centre of the city. The ones available are away. After some years the far off areas will be the only ones where properties are available and the prices there will shoot up," he said.

Hegde said that investing in real estate would not go waste. "There is a latent demand, and investing in property is worth it even if you are going to look for returns after 10 years. Finance minister Chidambaram has said that the country's growth would be 7 to 8 per cent, which means that real estate would grow by 15 to 20 per cent," he said.

Prakash Gurbaxani, MD, QVC Realty, India's first private equity funded Real Estate Development Company said, "Everyone knows that there is a global meltdown in liquidity and Indian markets are under pressure.

"If you are a genuine buyer looking for a home or an investor interested in real estate, this is the time to go and see what is available. You may be able to negotiate the cost too."

Gurbaxani feels that since the markets are down, companies may not launch new projects. "Since there are no new projects, there will be old supply in the market. After some time, when things settle down there will be no supply at all. So I would say now is a good time to step out and see, if there is anything sensible available to buy, depending on your need. What is sensible for one, may not be for the other," he said.

Farook Mahmood, president, National Association of Realtors India and managing director, Silverline Realty, said that the cost of properties has reduced in new projects, but it may go up. "Costs will increase for sure. Even now, there is a slight reduction but not all builders are offering it. Many have bought steel at Rs 54,000 per tonne and they have to recover whatever they have spent. Now is the right time to buy since you may get 8 to 10 per cent reduced rates," he said.

Free lunches? Beware

Freebies bundled with your new house could seem attractive but developers warn that it could also mean having to compromise on your house.

Of late, many developers have been offering freebies like cars or a plot with the purchase but here's what experts ask you to look out for:

Super-built and carpet area: Farook Mahmood advises people to be cautious. "There is no free lunch. I would say buyers look for location of the properties that have these offers. Check what the carpet area is, which means the actual space you will get to use. Some may sell you houses by just telling you the super-built area," he said. The super-built area includes the podium and balconies.

Mahmood also asks people to check the title, documents and the previous work of the builder. "It should not happen that you invest in a flat and it is not completed in time. Or worse still, that it is not completed at all," he said.

Nothing comes free: Irfan Razack too asks people to be careful. "There is nothing free. It is always better to get a straight deal than get something which you do not need," he said.

Balakrishna Hegde said that no big brand had ever offered a freebie. "I am running my company for profit. So are the others. When there is something free, you will later find that there was nothing free. You have paid for it in some way."

Gurbaxani asks buyers to look at the product they are buying and see if they really need the freebies.

"The freebies are like a Rs 2 lakh worth car for a house worth Rs 1 crore. Why should you compromise on your home when you don't need a car?"

Shailesh said...

All the prices discussion forget few basic principles.

One is Affordability. How many IT guys can buy 1 crore properties. I have lived and saved in US for 15 years, and even I cannot buy that property. Forget the local guy making 10 to 15 lakh per year.

Second is supply. India is huge country. The biggest selling point from builders is there is no buildable land. The issue is infrastructure building takes time. With so many new SEZ and townships being planned, the large supply will hit the market. These projects are being built little bit farther from main old cities where land is cheap.

I bet house prices in 2 years will be much more cheaper than today.

Shailesh said...

Real estate slump hits SRA schemes

He said it cost at least Rs 4,000 per sq ft on an average to put up an SRA project. "As free-sale SRA flats sell at prices less than those prevailing in non-SRA projects, there is hardly any profit to be made anymore,'' he said. Also in view of the banks' reluctance to give housing loans, there is no way a purchaser can even buy a SRA flat.

It takes four years on an average to implement an SRA project as obtaining the consent of slum-dwellers and building transit camps takes time. Only after this, a builder would be able to start constructing free-sale flats and during these four years, he would have to borrow finance at interest rates of over 25%. The fall in property prices is acting like a big speed-breaker for SRA developers.

For example, Sahana Builders, which is in the process of implementing a mega SRA project at Worli since the past four years, has built several flats with various accessories to house hundreds of slum-dwellers and spent a few crore rupees to build a nullah according to a BMC requirement. The firm is still to start building free-sale flats and it will be a few years before it starts getting returns.

I guess Sahana is toast now. All dreams of getting high prices will go down.

Observer said...

A short example of how the realty market works because of investors, and also how the stock market works. Do not be the one holding the monkeys in the end that you cannot get rid of! Maybe Abdulla will purchase all those monkeys with his black money.

------------------------------

Once upon a time in a place overrun with monkeys, a man appeared and announced to the villagers that he would buy monkeys for $10 each.

The villagers, seeing that there were many monkeys around, went out to the forest, and started catching them.

The man bought thousands at $10 and as supply started to diminish, they became harder to catch, so the villagers stopped their effort.

The man then announced that he would now pay $20 for each one. This renewed the efforts of the villagers and they started catching monkeys again.

But soon the supply diminished even further and they were ever harder to catch, so people started going back to their farms and forgot about monkey catching.

The man increased his price to $25 each and the supply of monkeys became so sparse that it was an effort to even see a monkey, much less catch one.

The man now announced that he would buy monkeys for $50! However, since he had to go to the city on some business, his assistant would now buy on his behalf. While the man was away the assistant told the villagers.

"Look at all these monkeys in the big cage that the man has bought. I will sell them to you at $35 each and when the man returns from the city, you can sell them to him for $50 each."

The villagers rounded up all their savings and bought all the monkeys. They never saw the man nor his assistant again and once again there were monkeys everywhere.

Observer said...

Abdulla and SabbalSeshu,

I have a doubt. Given that the article posted by Abdulla states that a discount of 8-10% may be available in Bangalore projects, why are all the people with those crores and crores of black money not buying up all the remaining flats? After all, as you said, real estate prices never go down, and as you said, there is so much black money available in India, all flats in Bangalore should have been bought up already!

Kannan Pothi said...

There is some theory called EMH - "Efficient Market Hypothesis" in securities...which is a bullshit.Same way now Abdulla & RE lobby is creating a EMH for Indian Real Estate market..which perputually goes up for ever..as per these nuts.When RE prices Manhattan is going down; Mumbai & Bangalore are nothing..against any comparison of livlihood,infra etc.

Surjit Grewal said...

Two week back I was in Mumbai on a business trip and was shocked to learn the real estate prices. A 760 sq. ft super built up flat, as they call it, with barely 400 sq. ft living area was priced at $ 2.5 million in a suburb called Bandra. Out of curiosity, I phoned the advertiser, who happened to be a real estate agent, and arranged an appointment to view the flat. What I saw was more shocking than the price. From the bedroom window all I could see was the densely placed thatched houses and people defecating/urinating just below the building. In US no one would not live in a place like this even someone offers the place free+$ 1000 per month living expenses.

While doing some research on the net, I found this blog and thought of clarifying my doubts

1.Why is the real estate so pricey in Mumbai.

2. Why do people want to live in such unhygienic places when they can, for a fraction of the real estate price, can buy something in so many places in Asia.

surjit grewal said...

In Manhattan,NY a two bedroom apartment measuring 750 sq ft carpet area (Im Mumbai probably 1200 sq ft super builtup ) costs around $500,000 that is one fifth of the price in Mumbai. Those who have not visited Manhattan, i'd like to say that Manhattan resembles the Mumbai down town Narman Point , minus the slums/traffic/crowd.

Vik said...

Surjit,

Your analysis is right on target. There is no need for such pricy real estate in India and for that matter in the location where you mentioned. There are very few transactions which occur and a lot of them happen in black(Indian speak for money which pays no taxes and is generated by dubious means). However those folks also will not pay for such garbage apartments. The builders are a cartel in India and everyone waits for the big boys to make a move.
It is a matter of time where reason and logic will give way to all the hype.

Shailesh said...

In my Inbox today, email from,

Buy Indian Properties

The number of events being held in US for NRI's to buy house in India is definitely very high this year. I have rarely seen anyone negotiating or buying actual houses though at these conventions.

Abdulla said...

Latest prices - This is as far as it will go.

http://www.realestatemumbai.com/rem_proprates.asp

Sensex is gaining. Real estate stocks are showing a upward trend. What does this indicate. recession? No.

Bargain hard and buy now before it is too late

Well wisher

Anonymous said...

Abdulla,
Buy some flats for yourself before it is too late and the prices double again.

I think Indian IT majors should worry now because of Democratic win in US. At least 50% business would have evaporated even in good economic times for India. But now with economy going south, the business could get hit by even 60-70%.

Abdulla, get a real job and start a new life. Your touting for RE is going to bite you in your arse pretty soon.

Anonymous said...

Abdulla is the dalla of builder whose livelihood is only to lick the ……
So don’t be amazed by such advice.

Cool Head said...

The Bandra prices mentioned on SanePrice are the builders published rates. If you go with an intention of buying they reduce rates by a whopping Rs. 5000/- psf just like that!

Anonymous said...

@cool head

still doesn't make sense. I earn about 25 lakhs/year (gross) and I may have to slog rest of my life if I buy a place in Bandra. I still have 28 year working life left. I would rather live in a rental apartment and retire with comfortable savings.

Anonymous said...

Rent yield versus FD returns.

Though i agree that we should not be paying obscene prices for real estate... I still dont believe that prices can go down to 60 % down for flats which have price tags of less than 2500 per sq ft...

I am not supporting the prices of Mumbai and Chennai flats which are somewhere between 4000 - 50000 per sqft

If it need to go down by 60 % we need to have deep recession in india... Govts taxes will decline by atleast 80 %... Agriculturists may earn well based on monsoon but they dont pay any taxes... Govt cant give more loans to agri industry.... They also cannot pay high interest to Provident fund.... In such a scenario the lending rates will go to 3 - 4 %... Most of the people who park their money in FDs will not benefit in the above scenario... Registration / Stamp duty has to come down...

The rental yield in such a scenario for a house bought at a price of 2000 / sq ft will be more than FD yield....

This is not an impossible scenario.... If rates can go up to 15 % it can also come down to 4 %...

Anonymous said...

I totally disagree with housing rate slash & India economy going down in deep recession.
This is insane argument. Indian economy is well diversified. What is the share of real estate in total GDP ? What is the total market capitalization of real estate companies?

Whatever rate correction is going to happen it will wash away black portion of price & speculative money & that is what every one want.
Just for information majority of land deals do not get registered. Some speculator buys the land, do soft agreement(saude pavati), sell it to another person at higher rate. Here the owner is not paying any capital appreciation tax, registration tax & income tax. Now the whole profit is black money which is ready for another deal. The reason is simple just by avoiding the taxes one can save 35% or more; essentially it means one has made that much profit in one deal. Only the real users who want to use the land for construction purpose enter into concrete agreement & registration.

Observer said...

I agree with the anonymous comment above who has 28 years of working life present. I reached the same decision sometime back. In Bangalore, I stay near Koramangala by paying Rs. 14,000/month as rent in a nice 2-bedroom flat. It is close to all amenities, including the Forum Mall, and also close to work and a good English medium school. To buy such a place, will cost me almost 60lakhs at list price. Which means I will be paying some 60,000 per month for 20 years on a home loan.

Life is short, and should be enjoyed while it is still possible. By being close to work and entertainment opportunities, I am able to have a somewhat relaxed life and also spend time with family. Stress of commuting and spending restless nights worrying about EMIs is absent. I am also able to save a fair amount of money every month.

Of course I would like to buy a place if it is reasonably priced, but I see some places in the neighboring areas for 25lakhs, and they look like chawls. Why would I want to live in such crappy tiny shanty apartments, and ruin my life and my family's life?

The downside to renting is that every 3 years, one has to move, because the landlord is afraid that if you stay for a longer period, you will establish some kind of claim over the house. But moving nowadays is quite easy since there are professional movers and they do it within a day for just 8000 Rupees. And with the easy availability of Dish TV, Walky, mobiles, private gas connections, it is quite easy to move. Only pain is the Post Office, and the bank, where it may take a few days of running around to get the address updated. I have given my parent's address as my permanent address for things like PF and ration card.

Now if it is true that prices will never come down, then I am definitely not going to ruin my health and family time by buying an apartment 30 km away from the city where there is no infrastructure and paying hefty EMIs. I will lead a peaceful life, and enjoy life in the meantime.

I am purchasing some land near my parent's hometown at just Rs. 250/sqft. It is not an IT town, and I plan to build my own small house and retire there. I am sure in the next 30 years, all kinds of facilities, including hospitals, and good roads will be available in that area. At least I will have some chance of being healthy when I retire along with substantial savings. Instead of spending all my life transferring all my earnings to builders.

Shekhar said...

It is a fabulous reading. Do not invest in house. If buying first time for staying keep your cash ready and negotiate till you get Dec 2005 price. This is true at least in Pune.

Shekhar