Wednesday, June 24, 2009

Understanding the long term trend with data

Hi All,

It would be great to have actual rates from various projects recorded over a period of time. This will help us to understand the trend of real estate prices.
The trend should be derived from data gathered from guys like us "on the street", not from some biased reports of property consultants.

The idea is that we can have a database-on-the-web to capture real estate rates.

With a few hours effort, I created a google spreadsheet to record the rates over time from a single project in Kothrud, Pune. The pricelists have been grabbed from the builder's website from March 2009 to June 2009.
The latest pricelist can be viewed here:
http://www.pethkarprojects.com/samrajya/availability.pdf

The spreadsheet can be viewed here:
http://spreadsheets.google.com/ccc?key=rmv0n4AJNHEfU_5RRg1I_bQ

Creating a chart, we can see that the rate is the same for the past 4 months!! Compare this with the boom period when rates used to increase every month. Definitely, real estate in Kothrud, Pune has flattened out.

The google spreadsheet is not appropriate for large amounts of data which can start pouring in from various cities, so I have also created a mysql database with multiple tables.

How to gather the data?
1. Quoted by builders - this can be done by gathering pricelists of the projects at exhibitions, or from the website of the builder.
From the pricelist, we need to calculate the carpet area (excluding terraces, balconies, and other non FSI related areas) and the total cost to the buyer (including stamp duty, registration, one time maintanenance etc i.e. everything).
The carpet area, total cost and date can be entered into the database.
Entering pricelists into the database will have to be done by moderators.

2. Posted anonymously by real buyers:
Anyone who has purchased a property can anonymously post the carpet area, total cost and date. The anonymous user is not allowed to enter data directly into the database, he can post in this blog and a few moderators like us who have write permission to the database will enter his post.
What if someone posts a misleading rate? I believe 1o people can lie, but 1000 people will not lie. When we have hundreds and thousands of unique users posting rates, the misleading posts become statistically insignificant. This is the same principle on which www.carwale.com operates.
Also a restriction is that a user can post only the rate for a property he has actually bought, so we can restrict posts to 1 post each month per email id.
People can also post links to builder's websites which have published pricelists.

There can be a discussion on how to allow anonymous posts.

We can have admin / moderators for each city, like I and someone else can do for Pune.

I can help with the perl code, sql and database, domain name, hosting, but I aint no website designer. Maybe we can form a team to collaborate on the website?

31 comments:

R.O.M. said...

The real estate prices rose substantially due to the illegal transactions. we all know this.

Now in a major turn of events which has gone unnotices real estate transactions under GPA ( General power of attorney). For the starters GPA is simply a tool to hide your black money in deals. You buy a house and own it by paying black money, and still legally you have not bought the house. Result black money is hidden. (Read more at http://www.deccanherald.com/content/9991/gpa-misuse-draws-sc-flak.html)

It is due to GPA that black money finds save haven in real estate.

Now if in a year or two GPA is banned and registry made mandatory what will happen.

1) A tremendous supply will come to the market. (folks do remember that a large no. of houses are not avlbl on registry and don't qualify for loans.) InHaryana builder floors can now be registered and qualify for loan. This has led to a little increase in these floor prices. However it has brought tremendous pressure on flats, as ppl can now go for cheaper builder floors rather than high rise apptmnts. I personally observed it in gurgaon.

2) Speculation happens on black money. only fools speaculate on his/her hard earned money. If GPA is banned than black money will not be available for speculation in real estate. And this is going to put extreme pressure on real estate prices.

Now that SC has set the ball rolling. Lets see how the Govt. acts on it. Going by the track record of Congress govt. I don't see this being implented in Mumbai/ Delhi NCR. However non-Congress ruled states may implement it in 2 to 3 years.

Comments on post welcome (Only logical & fact based.)

-Retired Old Man

Anonymous said...

Anyone having an idea on Indirapuram locality (NCR)

What is the current. market rates (sq ft rates for aptmnt). In case you have info on prevailing land prices as well please share.

Vik said...

Removed all off topic posts. I'm not a fan of getting into the police cyber cell since these issues are trivial. They have bigger fish to fry. Vandana I will contact you and Abeer too. However not to take up this issue any further. I will delete this comment in a few days too. Lets stick to the point of Indian housing.

Anonymous said...

Indirapuram is not even Delhi but UP. 50% drop in prices at Indirapuram in 2-3 years. There is so much supply in that area and 60% flats are empty bought by speculators.

Bharat said...

I just got off a call with some friends in India. My impressions were that RE is already seeing a -ve trend in Mumbai Suburbs. In Thane Hiranandani there are quite a few "Ghost" Towers. So also at Mulund Nirmal Lifestyle, Powai...people have stopped buying and banks are also leery of lending.

On the western suburbs, Kandivali, Borival is also seeing a slide. Its more or less a matter of negotiations. Also, the overwhelming feeling in this small sample space of friends is that the markets should do another 25% or more correction from these prices in the coming few quarters. All my friends are from the IT industry and are all born and brought up in Mumbai.

Oh and one more thing they also felt that one cannot trust press and other analysts who keep popping into CNBC - Kuch be bolta hai woh log...

And at least one of them was also a follower and poster in this blog(Not BB, I confirmed it :))

Hope this helps. To me its a confirmation that one needs to still wait or be prepared to negotiate hard. Best of Luck.

Anonymous said...

I am from Bangalore. I am surprised seeing the occupancy in Bangalore over the past few years. No i am not talking about the flats. I know there are thousands of vacant flat. But i am referring to individual houses. You go to any place. You will see its all developed with houses built and hardly any vacant lands.(even places far from the city)
I always wondered who these people are. (i mean the profile) Surely it cant be all IT people. Are these guys also in huge debt ?

Anonymous said...

My observation in Bangalore, projects have cropped everywhere, but not everwhere you can live. If you visit and talk to people at the top villa projects around BLR, you will see none of them are even 50% occupied, people have bought them in 2004/05 time and waiting for the project to complete and make a profit. Some of the projects dont even have proper water and electricity. If you talk to the builder he will quote a price of 1.8 Cr or 1.79Cr. God know why such high prices. Most of the people who are living there had bought homes cheap in teh past years. Buying now is suicidal and you will be in debt forever. Its good to wait one more year and the let the builders budge.

Anonymous said...

@above. thanks.
but there are still plenty of people trying to buy. (everyday i see enquirers like home loan, flats etc in my company's mailing lists) . i think people are still in that mentality and i doubt if this changes.

i started working in 1999. obviously i never heard of (or not aware of) real estate boom or burst before 1999. i wonder why there wasn't a mad rush for RE during 1990-2000 when IT stared and was in boom. During 1999-2000 i never saw people buying or trying to buy. of course IT slowdown started in 2001. If i am right this real estate boom started in 2004. Now people talk about only about site,flat etc. Strangely everyone wants to buy no matter what the price is. :) Nobody thinks if its really worth the price. All they want is a so called own house (by paying whatever savings they have as prepayment and huge emi over the next 1 or 2 decades)

Vik said...

Mumbai is a different animal. I would strongly stay away from it as the affordability is just not there for the middle class buyer. Mumbai in my opinion is 100% over priced as compared to Bangalore/Hyd/Chennai or Pune.
If you get anything 5k and have a decent downpayment you can ride out the downturn and unexpected job loss etc. If not, you are screwed paying high interest payments while seeing housing prices slide. If you buy in Mumbai you should be ready to accept a notional loss of 30% while ensuring that you have the money to cover the EMI's for the next 10 years. Interest payments at 10% will just kill all price appreciation. There could be many folks with black money and for them the risk is lower so a 30% drop should not push them out of their houses since they are not leveraging loans.

Vik said...

Anon @ 10:24 :
Which city do you work in ?

Anonymous said...

@vik
bangalore
i am the same as Anon @9:53 AM :)

Anonymous said...

Hi all

Been a reader of this blog for a long time.
Some info about Hiranandani estate thane. I was recently in India and went to HE Thane.

A highrise "tribeca' which is coming up in thane 3BHK is quoted at somewhere around 1.1+ crore. This is not the exact price but approximate. I spoke to one "manager" in the site office and he told me that hardly 3 or 4 flats had been booked in the huge highrise.
Also the Hakone park has been closed as it was running at a loss. Buildings like queensgate also seem to be almost empty.

In Andheri, I saw lots of billboards for NAHAR AMRIT SHAKTI offering 2BHK in Chandivili farm road powai for 55lacs + parking. And in about 3 weeks saw a billboard thanking all the people for their overwhelming response.

The Andheri East Kalpataru buildings(On the Jogeshwari Vikhroli link road) seem almost empty. There is an Oberoi coming up on the opposite side (all priced above 1 crore for a 2BHK surrounded by Jhuggis) constructions seems slow.

Overall you can see a slowdown. Hiranandani has either laidoff/told staff to take month long leave or transferred its personal to the chennai project.

There are so many half built highrises on the way to thane....in Bhandup, kanjurmarg,vikhroli, mulund and thane.
The reliance metro project is literally being built at a snails pace...
Oh and one more thing...It takes an easy 45 minutes to go from andheri east to west on any given day..Now That is a short commute for all of you!!

Vik said...

Bangalore is still reasonable considering some areas around ORR available at 3k. I think Indian psychology rates land as the topmost asset when compared to gold,stocks, bank deposits and bonds. No wonder there is a huge demand for property.Everyone has seen some family member or friend get rich selling land and many others regretting their decision to defer purchases and then buying at the peak.
If you are in India, you have to have some exposure to property which is within your means. I can say that the apt bought by my parents has given great returns over 30 years. However the horizon has to be atleast 10 years, else we are asking for trouble.

Bharat said...

Anon@11:41 AM,

I was in Andheri(W) and had to commute daily to Andheri(E) in 2004. In peak hours it used to take upwards of 1 hr..I think the flyover and other things might have helped by now. But, still 45 mins is extremely painful :(

On the other hand IT is housed only around Andheri(E) or Bandra Kurla..

What to do? You get peanuts but at the price of Biryani! Corrupt politicians and Municipal/PWD jerks have been bleeding the country dry for decades now..

However, economic cycles work in India and they have been rather abrupt and dramatic. Let's see how dramatic and abrupt the fall is this time for RE.

GK said...

Vik,
The rate quoted by goplan grandeur, which is in brooksfield, away but close to ORR is at 2200. This is a completed project, and ready to move in.

So 3000, for ORR, is actually steep.

Vik said...

I think there are tiers of builders in every city and there is a brand value associated with each. If Goplan is a good builder I would say 2200 is a good price and that too near the ORR.

Anonymous said...

My office is opposite Tribieca and you are right nothing is moving there. The builder initially was quoting 6000 going upto 8000 psf. The cheapest flat was 1.6 cr, looks like he has dropped the rate. The branch manager of Indian bank which is opposite the site told me taht he had given some loans to a group of five people who bought flats from Hirnandani a couple of months back and the rate given to them was 3900psf. The builder officially quotes 5 K now, so I am sure there is major pressure on him.

Anonymous said...

hey moderator...

can you post a survey on the blog to find out what is the rate a buyer is willing to pay for a 2 BHK,,..

You can start by NCR region and later cover all major parts of India.


You can start by giving a range like..

q. 25-30 lac
e. 30-40 lac
f. 40-50 lac
g. 50-60 lac

This will give you demand side data. The rates that builders quote is suplly side price..

Anonymous said...

Indirapuram rates are 2500 Rs / Ft currently.

I doubt if it would fall to 1250 Rs sq ft . Max it could come down to 1900-2000 rs / sq ft.

Anonymous said...

Mumbai is a fast city. It ages you faster!!!

I used to work as a Banker in early 2000 in Mumbai and was getting a hefty package. It was simply huge. But so were my expenses. On house EMI, travel etc I used to spend so much that Despite earning over a lakh p.m. I could neve save any. That year I had just crossed 40 when had heart attack.

In a deluxe suit of hospital, perhaps for first time in 20 years I thought for myself. I felt like the poorest guy. Mumbai had taken my health away from me.

In next minute, I had decided what do. I left my job. Sold the Mumbai house and came back to my native village. I bought a small house and a shop. Started doing small business. And after 5 years I had more savings that Mumbai and more importantly great health.

Posh Apartments and Bungalows are not worth if living in them means giving all you have.

The real estate prices, india shining, youngistan sounds good but I wonder what will happen when this generation gets older. You work 15 hours a day to build that house or pay for pension plans when people in their 40s are dying of heart attacks.

Greed has taken over. Corporate success, life race is now the priority.Companies force employees to work long hours for success. But Many forget the words of Biggest Corporate Indian Sri JRD Tata. He said "I don't want high GDP for India, instead I want high GNH (Gross National Happiness). I just want Indians to be happy.'

Please spare some thoughts on it.

Vik said...

Well said. The biggest cause of disease is stress one has to factor that in the lifestyle we lead. Big houses and big EMI's are good if you able to survive and enjoy the benefits they provide in your 50s and 60's. Good note of caution

Anonymous said...

@Anonymous
Could you tell what small business you are into?. Actually i have been seriously thinking on the same lines. ie quit the job (Bangalore) and go back to my village. But i am confused as to what i should be doing :-)

GK said...

GNH is a term originally used by king of bhutan. Not sure if JRD used it or not..

Anonymous said...

Hi Vik,

I dont know if this comment warrants as a seperate post but i would definitely like to espouse my views as an average middle class Professional and my expectations.

I am 27 right now , married and working in the US for the last coupla years. While in India before my US stint, Was making close to a 7 digit salary in India. I am a chennaite. Would look to settle down by buying a house by my mid thirties.With the current rates i dont see any remote possibility for me to buy a house.

I believe by my mid thirties i should have someting like 30 odd lakhs in my savings account as per today's value ( i am adjusting future growth of money to account for inflation too) and this would constitute 10 years of savings wherein i would consider that 50% of the savings is because that i had been one among the fortunate few to have worked outside India which enabled me to save 10 lpa more and also havng lesser commitments till my mid thirties. I know Onsite is not a big deal but i still think working for more than two years is a bit beneficial for all salaried employees.

BUt in my mid thirties i believe i would know that i need to settle down in a place and most probably would have new additions to my family. I refuse to buy a dingy nano home with my hard worked savings for 10 years and lead a quality of life which is not commensurate with the savings that i have saved for the last 15 years.

I am definitely looking at a built up area of 1800 sq.feet with close proximity to work,schools, groceries and hospitals. I am not lookig at swanky gyms and swimming pools but would definitely need coupla car parks.

I am willing to pay 60 lakhs to such a house and can take a max of 20-25 lakhs loan . My EMI should not be more than 25 % of my household take home income. and my EMI should be equal to the rent that i can get out of the house or marginally higher than that . For me a House is not an asset but something which is more personal and which is a means to cater to my sensibilities.

I know it might appear to many of the folks that i am being too greedy or cautious, but i dont see any reason to be punished for doing everyting right till age of 35 and then becoming a slave to rising EMIs and harrasing phone calls.

I strongly believe i would fall within the top 10% in terms of annual household ncome in my country so my aspiration of 1800 sq.feet for 60 lakhs is not greedy, but justified. When i see people getting houses in US for 300k where annual household income is 100k why cant i get a similar one in India. definitely something is amiss.

The Reason for my conservative estimate

a) need to ensure that i pay for my children's education and other expenses
b) save for my Children's Under Graduation
c) Probability of me losing my job is higher as i belong to IT industry where the more experienced you are higher the probability that you might get fired.
d) Salaries seem to be shrinking
e) 10% interest rate is huge. my sal has been constant for the last two years but prices of commodities and expenses have shot up by at least 10-15% YoY.

To be continued...

The Average Indian Buyer

Anonymous said...

[concluded]

I would also believe that i have enough cash in my bank acct after buing my house to support my family for at least a year assuming i get laid off and have no job for a year. This is not pessimism but a definite possibility in the future.

When i compare the US and India the rates per sq.feet seem ridiculous. people say that our density is 15 times the US, so thats the reason why we have flats. at the same time believe we have huge disparity too. The biggest problem is land not being released and having stupid laws. if the banks did not renew the loans and considered loans given to realtors as NPAs our RE would have fallen back to reality. But i think it would soon be brought back to reality.

Dont believe any news quoted by ET. Housing is unaffordable for NRIs too in India. With Job insecurity scaling new highs big ticket purchases can wait.

As I stated for sentimental reasons i would buy something for 60 and maybe stretch it at max to 80 provided i get lucky over the years and make 20 quid more, otherwise i am better off renting.I am sure i can get good homes for less than 25k.. with 30 lakhs in my kitty i can pay the rent with my interest income and also claim tax benefit on it.

So If rent i might not own a asset, but at least i wouldnt have lost my peace of mind and nobody would have the right to deprive me and my family of a sound night's sleep. I thnk i am better off living in a rented home in that scenario.

The Average Indian Buyer

Vik said...

You are spot on in your thinking however there some things to consider at your young age. When I was 27, India didn't go thru the boom it did, housing prices were affordable by US NRI standards and noone thought the growth in IT and other industries would grow as they have. With 6 years experience i I could get a salary of 4L, that would be considered good i the late 90's. Most people in IT had numerous offers from US companies and you had to really be bad in your job to not get an offer. Salaries have jumped now so have housing prices so expecting a house at 25-30L which were the prices then is probably not going to happen. I would suggest that you evaluate the locality you want to live in and then negotiate as a group with the builders. Chennai is still way to cheap if I were to consider Mumbai and at 10L+ you are in the top bracket of IT. If you can get the 60L house down to 45-50L I would think it would be a good buy.

I know it is distressing seeing all you savings being put in a house negotiating is the only way you can maximize your gain and feel good about the purchase. One tends to get into buyers remorse if they buy something which they think is not worthy.

Also I think if you are going to live outside India it makes sense to buy something which is under construction from one of the top 5 reputed builders in Chennai. Also use the loans to make some of those payments, including 0% credit card loan offers which you keep getting from time to time.

In Chennai buying land on GST road near Mahindra world city is also not a bad option. I know many people who have done it and I think that is a good investment for the years ahead, specially if you have a 5+ year horizon. Current rates are in the vicinity of 300-600 in the radius of 5 kms and they increased the guidance value of some lands near MWC to 600 from 370.

Anonymous said...

VIk i fully understand that house prices at 25-30 is not possible without compromises, but i think 60 lakhs is still a huge amount and very few would have that amount. i doubt if my batchmates have that amount of money unless they bought a flat and sold it to te greater fool.. all of us have been shrewd investors but i am yet to find one wo has not been impacted by the stock market crash of 2008. my gut feel says we are gonna have a bigger crash soon.. and with regards to GST i have heard a lot about it but good schools and hospitals would be of paramount importance when i look at such areas.

though you want to come back to your home country these politicians and builders seem to be baying for everyone's blood. i am sure if DLF or parsvnath goes bankrupt there would be innumerable folks who rejoice.. i think we need a few high level bankruptcies to bring the real estate lobby to its knees. its time they realised consumer is king..

average indian buyer

Vik said...

lets not forget that the moneybag builders control the politicians. I dont want to take names there are rumors but a big union minister from TN has thousands of acres in GST and other areas in Chennai. If we need prices to fall we need a revolution. That could have other unintended consequences which could be worse. While you look at your batch-mates, remember there are many batches before you and follow you. Each one has a similar problem like yours. They might not be as lucky as you, however their desires and aspirations are no different.

Anonymous said...

VIk,

I just mentioned my batchmates because i know how each one makes and the yardstick is same. with regards to senior batchs have no clue. some earlier batch folks would be lucky, some unlucky.. but as for the new ones who entered the market the situation seems really bad.. guess it was pure luck that some of us passed out during 02-07 period. but yeah agree to your point..everyone has the same aspiration and to cater to that as vulture says we need further 50% drop....

Average Indian Buyer

Onion Insights said...

Hi Vik.


We are following up on our invitation to you to sign up as a OI Mystery Shopper. Is there any specific question you have or any doubt that we could clarify for you? In case of any difficulties signing up, give us a call on +919769781001 or shoot us an email at support@onioninsights.com.
Hoping to hear from you soon.


Regards,
OI Team - Mumbai

rajni sharma said...

Hey this is really very nice post...
Nd one of your best post...Thanks
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