Friday, January 01, 2010

Predictions for 2010

Hi all,

The blog has gone little dormant. How about your predictions for 2010?

What will be status of Housing in India?
Will RE boom continue or Bust start?
How much?
Best growth areas in India?

any other predictions....

43 comments:

shailesh said...

Prediction: Growth in emerging markets will decelerate dramatically.

Anonymous said...

Double Dip in US, Europe, China slips into sub 5%, Dubai bust....

India goes sub 5% and Realty tries to sell its shares to Kachara wallahs ...finally going bust before 2011.

Anonymous said...

MH Govt has increased property rates in the Ready Recknor documents and also increased stamp duty. All this will increase propert prises by 10 - 15%. I am wondering if this is Builder lobby's efforts to spread news that prices are going to go up and wont come down.
I also thought housing would come down to 2003 level in 2009. Stimulus has prevented from happening it. I would wait till the end of stimulus is over.No doubt stimulus has helped us everyone but property prices should come down to realistic level.

Anonymous said...

US economy will show signs of either a real recovery, or Wall street will fake it. This will lead to a temporary uptick in stocks before reality sinks in and a double dip will start in the later part of this year of 2011.

India will show a lot of irrational exuberance connected with this recovery and property prices will not fall in 2010. In India-2011, after reality sinks in, so will realty!

China is in for a bad stretch, and so is the middle east. But, watch out for the upcoming crisis in the world: The much talked about dollar crash will happen in 2011-2012. We are getting close to it.

One final prediction (kind of a prayer as an Indian): The commonwealth games in Delhi will be a success and we Indians will be spared national embarrassment.

Ashok

Anonymous said...

Vikwill get frustrated as his predictions are not coming to reality and will close this blog!!! Prices will rise !!

Vashi Hunter

Anonymous said...

My 2010 predictions for US:
India will follow suit.
- Economy:

Double dips in 2nd half 2010 or 1st half of 2011.

- Inflation/Deflation:

Deflation resumes in 2nd half 2010 or 1st half of 2011 for assets you own and inflation of assets you need.

- Stock market:

Double dips before June 2010.

- Housing:

Double dips by 2nd half.

Anonymous said...

Vashi Hunter,
The Govt. cannot keep providing massive stimulus. If you think the RE is priced right, please buy some more flats. All power to you to buy more RE and enjoy the profits.

I can bet you that there could be a massive catastrophe in store for India, China, Singapore, Australia, HK and other Asian economies where RE is up by 300 to 400% in the last 4-5 years. And when it unfolds, many people in India would be in tears.

Btw, the first half of 2010 would look good and things would seem to be normal. But later during the year, a lot of Govt. deficits would be exposed, inflation would kick in and higher interest rates.

Venkateswaran K Iyer said...

My two cents worth of predictions for 2010:

Q1-Q2 2010: US will see recession and a stock market collapse. China will see RE and stock market collapse. Indias stock market will top out by Feb 2010 and will start falling after budget and keep falling throughout rest of 2010. RE prices in India will stop rising and there will be few sales after budget. New launched projects will stall. Prices will stay steady or dip 5-10% (in affordable apts) or 10-20% in luxury apts. Gold will rise 20-40% in dollars (1400 per ounce)

Q3-Q4 2010: We will see Shanghai 2000, Dow 8000, Sensex 12000. Commodity prices will collapse. Metal stocks will do badly (exit by Q2). Gold might slowly fall, but I am not sure - might keep rising - unpredictable. RE companies will face fresh liquidity problems as interest rates will rise. There will be no more buying in RE.

End 2009 marks the end of lift in RE sales and prices, reflecting pent up demand and 6th pay commission arrear related sales.

Fresh launched projects of Dec 2009 will see no sales and will take a long time to build too.

The phony recovery will be over in 2010 and the return of bear markets and recession seems unstoppable.

Vik said...

Here are my predictions

1. Prices will be stagnant in most Indian cities barring Mumbai which will see a fall.

2. India is already seeing competition from Philipenes in voice-support/call center operations and this accelerate in 2010. Infact the company I work for an S&P 500 financial institution has already outsourced call center ops to a company in Manila.
3. Hot money will leave India in slow motion
4. RBI will support the rupee in the 45-48 range as this money leaves the system.
5. Indian stock markets in Dec 2010 will be lower then 2009 though the volatile nature of emerging markets can give even an experienced trader a heartburn
6. All projects in all Indian cities will be delayed (This is a prediction for the decade :)
7. Leverage will wipe out most Mumbai investors

Cool Head said...

It all depends on what "The Bearded One" (Helicopter Ben) does.If and whenever he is forced to increase the interest rate from the present 0.25% by any amount (even another 0.25% or so), all asset bubbles will pop (including the Dow Jones stocks, BSE Sensex, Mumbai realty, Kong Kong realty,etc).It is only a question of timing. When that happens, all those smart carry traders who have bet their shirts and underpants on the dollar remaining weak will get eliminated en masse. The dollar will bounce back-this may lead to a temporary reprieve for IT and call center business but cannot say for how long.If the TARP funds get over and US protectionism over jobs rises, plus the increasing sophistication of Phillipines, etc will decide this.
But whatever happens, we (in India) would have no control over it-everything will be done by externalities.

Anonymous said...

Vik,
India also is going to end the
$100 billion stimulus that it started last April. Budget deficits and country's fiscal deficit is very high now.

RE prices in India have no where but to go down. They are already way way high unlike the bubbles in all Asian economies. US will see a double dip this year and India will be toast along with other Asian economies.

Anonymous said...

•*`*•. .•*`*•. .•*`*•..•*`*••*`*•. .•*`*•. .•*`*•..•*`*•..•*`*•
HAPPY NEW YEAR and a Prosperous, Healthy 2010 for us all.
•*`*•. .•*`*•. .•*`*•..•*`*• •*`*•. .•*`*•. .•*`*•..•*`*•..•*`*•

Thanks Vik for having this Blog. The RE in India would have already gone down by 50% if it was not for Govt. intervention to keep the builders, bankers and house prices bloated high. How long can they do it.

I think this year we would see Govt. fighting inflation and raising rates, higher EMIs for people and removing excess liquidity from the Indian market.

Anonymous said...

I don’t think the real estate market will stabilize yet, though some places will have bigger price drops than others. There may even be a stupid and brief resurgent mania or two in some big cities.

Unfortunately, what will continue is ineffectual attempts by the government to “rescue” the housing market.

Anonymous said...

Prediction for US:
I predict 2010 and on as the decade of increased bank failures, endless, endless lawsuits and prolonged (true)economic stagnation…that’s if we are lucky and I’m an actually a optimist.

Anonymous said...

I predict Q1 of 2010 will see a continuation of the mania in the housing and stock markets, with housing **inventories touching lows** only seen near the peak of the bubble. Housing prices will rise in many areas due to the lack of inventory, low interest rates, the tax credit, and relatively low prices (as perceived by buyers who think 2005 prices were “normal”). The power of low interest rates cannot be overstated.

The DOW hits ~11,500, and the S&P hits ~1,400 by September. Gold goes to 985 in January, then goes back up to the 1,200-1,400. The dollar rallies to 78.21 in the first few months of the year, then declines as more govt programs are announced at the end of April and the Fed continues to force rates down. No change in interest rate policy until Q3, when they raise rates 1/4 pt. with a disclaimer that they will drop them if need be.

Unemployment drops for the first three quarters, then rises again next winter.

Overall, 2010 is relatively flat, with bullish tendencies for the first 2-3 quarters. IMHO, 2011 will see another “official” recession with multiple state/municipal bankruptcies and bailouts, and housing prices begin to take another leg down.

Anonymous said...

I have to question that logic based on a recent example. What were Japanese interest rates like over the period (roughly 1990-2009) when their housing prices crashed spectacularly, never to return?

Anonymous said...

Granted that top economic policymakers have acted as though they had a super-legal mandate to stop the financial crisis by any means necessary. But there is still a predictable aspect to the situation:

- Market forces will make the housing prices correct downwards towards equilibrium (market-clearing) levels.

- Interventions will attempt to use various forms of stimulus to offset Mr Market’s desire to correct.

Anonymous said...

Gold is going to go higher upto $1500 an ounce and then crash back to $500 levels, like it happened in 1988 when it lost 50% of its value.

Bindas Bhai said...

Dear Negative Narayans,

You guys r seeing with ur 'negative colored" glasses. what u guys hope to happen is not going to happen.
Don't compare India with US or China. We don't spend like Americans and ours is not communist govt.

My predictions
1. Housing prices will continue to raise.
2. India will show a trend of crossing china.
3. Corruption levels in India touch new levels.
4. with the new projected prince, gandhi's will give us stable govt for next 8 years (with out any doubt). Next elections, congress is gonna sweep.
5. Sensex will touch 25k again and stabilize.
6. Gold prices will contiue to raise, US $ will go down to 40

Buy now or never. Housing prices r going to costly. many more are moving to cities ( by 2040, 40% of indian population will move to urbans)

Those who wait for price to fall, will continue to wait for another 10 years.

Anonymous said...

BB above:
YOU SAID--
1. Housing prices will continue to raise.

DON'T BE SURE ABOUT IT. THERE IS A LIMIT TO INSANITY. GOVT. MAY NOT EVEN HAVE FUNDS TO PAY THE SALARY INCREASES THEY DID WHEN THE DEFICIT INCREASES.


2. India will show a trend of crossing china.

NOT ANYTIME SOON. IT MAY TAKE ANOTHER 25 YEARS FOR INDIA TO REACH WHERE CHINA IS TODAY.

3. Corruption levels in India touch new levels.

HERE YOU ARE RIGHT. IT IS A LAND OF THIEVES. PEOPLE LIKE TO STEAL BY NOT PAYING TAXES LIKE THEY BUY RE IN BLACK MONEY. PAY WHITE MONEY AND PAY PROPER TAXES.

4. with the new projected prince, gandhi's will give us stable govt for next 8 years (with out any doubt). Next elections, congress is gonna sweep.

HOPEFULLY, RAHUL GANDHI WOULD BE MORE SENSIBLE TO CONGRESS AND WORK FOR INDIANS. 80% OF INDIA'S POPULATION STILL IS UNDER RS. 20 PER DAY. SOMEONE WHO WILL WORK FOR THE WHOLE COUNTRY RATHER THAN SELECTED RICH PEOPLE.

5. Sensex will touch 25k again and stabilize.

YOU ARE DREAMING. IT IS ALREADY OVER INFLATED. IT MAY GO TO 18,500 AND THEN BACK TO 10,000.

6. Gold prices will contiue to raise, US $ will go down to 40

YOU ARE RIGHT HERE. GOLD WILL GO UP BUT RBI WILL KEEP USD AROUND RS. 45.

Buy now or never. Housing prices r going to costly.

YOU KEEP BUYING. YOU TOOK THIS MANTRA FROM US WEBSITES. SEE WHAT FATE US IS GOING THROUGH.

DON'T BE TOO OPTIMISTIC. ONCE THE GOVT. RETREATS FROM ITS STIMULUS POLICIES, AND RATES GO UP, STOCKS AND RE BOTH WILL GO DOWN. IT MAY TAKE 3-4 YEARS FOR THIS WHOLE THING TO UNWIND.

Anonymous said...

Bindaas said:
"Don't compare India with US or China. We don't spend like Americans and ours is not communist govt."

What US and India are trying to do it distribute taxpayers money to the bankers and builders to keep the housing market up. Is this not Socialism?

Bindas Bhai said...

The above is not me(original), although some of his points i agree with. I am not writing on this blog for some time now. I will start writing only when i think RE is likely to fall or if i have been asked by someone to comment.

All the best to you all guys!!

Bindas Bhai

Anonymous said...

To the sundaas bhai's of the world.

700 % return in 2009 !!

Can you make this kind of return in a year? In real estate??

Venkateswaran K Iyer said...

I think Dow will fall for the next 20 years.

I expect it to fall 20% in the next 6 months, rise and then then keep falling with lower tops and bottoms for maybe 3 years. It will go to sleep in a dungeon after that.

In real terms, Dow will fall more. Because of inflation, which will keep the dollar price for shares at the same level even as poor economy will lower share value, nominal Dow will fall less.

There is a possibility that US might go into a deflationary spiral. But I am not at all sure, gut tells me stagflation. In US RE, I am sure of 20 years deflation though.

Short term interest rates will be kept as low as possible by the fed. Its a delicate balance. US fed action will be ineffective, but easing by ECB, China, Brazil/Russia (bothered by falling commodity prices) will prevent global deflation.

Stagflation is my bet.

India will see higher interest rates and high inflation (no deflation in India, I am 100% sure). We are the only country without overcapacity in anything (RE included).

USA has many million homes more than number of households (1.8 million or 18 million empty houses from what I remember. Anyone have exact data?).

China has no slums - it also has more homes than households, although many are two room hovels (better than juggi). These homes are all that the Chinese can afford though - they cant afford to live in the palatial flats they have built. Banks which have financed Chinese RE will go belly up. Most Chinese banks are now Zombies, people just havent seen the dead eyes of the zombie yet, that is all.

Despite low fed short term rate, bond yields will go up.

Idiotic 401 K investors who sold stocks after the crash and went into bond funds will lose half of their capital values, as yields will double. Americans have been total idiots this decade. They have fled to the safety of treasuries through bond funds - a good trade when fed was lowering, a really bad investment to hold as rates rise, no safety there at all!

Total total idiots. I expect them to watch their 401k fall further as bonds crash, then exit bond funds after they have taken their fall, shift to equity which will shore up values for a while in 2010 and early 2011 and then stare at further erosion as their shares in broken companies yield nothing.

Americans are so badly screwed, so solidly screwed. Their capital (of 50 years of work) is now burnt to ashes. The baby boomers have crapped on their dinner plate.

Equally doomed are Indian IT and other outsourcing ventures. Stay away from their stocks.

I base all predictions on gut feeling, on data absorbed here and there on the internet. Nothing more. I am not an analyst, I am a consumer of analysis

So Wiseman, 8000 is a guesstimate. Could be 6400 too.

But I prefer 6400 for 2012, 4000 for 2015 for the Dow.

There can be no more bailouts. Not possible, USA is bust. The more it prints, the more US pensioners will get screwed and blame Obama for it. No way Obama will print more money, not if he wants to win the next election.

In any case, Obama will lose the next election. He is going the way of Jimmy Carter.

Anonymous said...

Anonymous,10.34pm

Please check your facts before posting.In Australia, property prices are almost stationary(+- 10% variation) since 2003-04. How did you get an impression that they ( prices) rose to 300-400% in lats 4-5 years.

Anonymous said...

Anon above:
You are a jack ass.

Australia has the biggest bubble of all. Houses that were selling for 200K in 2002 are selling for 700K now.

Go and check your facts. Look at the 23K stimulus and the cash back to taxpayers that Aussie Govt. is offering.

Anonymous said...

Australian housing bubble started in 1999-2000. They were already too high by 2002.

Anonymous said...

* REAL ESTATE * JANUARY 4, 2010 * WSJ

Real estate faces a tough slog to recovery.
In the U.S., government aid to housing market is being phased out; commercial sector faces a glut of space.

Real estate, which sparked the global economic downturn in 2008, struggled to recover in 2009. But the path to a full return to health is littered with land mines that could send the sector spiraling downward again, possibly upending the nascent economic revival.

The past year’s progress in the housing market has relied on government programs that are scheduled to be phased out. The commercial real-estate market is faced with huge amounts of unoccupied space and a deluge of defaults and foreclosures that are putting new stresses on banks and other financial institutions already are on life support.

The outlook for 2010 is uncertain, at best.

On the bright side, U.S. housing markets stabilized in 2009 as the Federal Reserve’s policies drove mortgage rates to 50-year lows for much of the spring and autumn. Home prices posted six consecutive months of modest gains through October. The supply of foreclosed homes for sale has declined, in part the result of a program President Obama’s administration launched in February designed to keep at-risk borrowers in their homes.

But the underpinnings of the positive trends are fragile. The Fed brought down mortgage rates by committing to purchase as much as $1.25 trillion in mortgage-backed securities. That program, already extended once, is set to expire in March.

Rates could rise by a full percentage point after those purchases end, sapping any housing recovery, says Ronald Temple, portfolio manager at Lazard Asset Management. He predicts that prices could fall by 15% to 20% if the program ends as planned in March.

Home sales also have been supported by an $8,000 tax credit for first-time buyers. It, too, was set to expire in 2009 but was extended by Congress through the first half of 2010.

Anonymous said...

Anon above

You called me... a jack ass!
Please take care of using of your words.

21K stimulus (for new homes) and 14K stimulus (for existing homes) provided by Aussie govt has inflated housing prices in Sydney by 11-12% in 2009 but as compared to peak in 2003-04, these are still at 2003-04 level. From 2003-04 to 2008, actually Sydney has negative growth in many suburbs.

Dear anon, when you talk about prices, you should go by median prices (state wise and suburb wise). You are saying that 200K house in 2002 is selling 700K now in 2009, may be you are true as it may be a specific case but please do not generalize it.

Australian house prices are 20% inflated accordingly to World Bank and not 300% as told by you.

Anonymous said...

When you guys discuss DOW, US, Sensex etc, I don't understand that much. I am a layman.

But I have my simple facts & that's why I think RE prices are a bubble & should bust anytime now.

I live in Mumbai & seeing property price rise since end 2007. To me rise was faster than ever & always felt it was unrealistic, but it kept on increasing.

A friend of mine then gave me an insightful theory. Let's call it 'affordability theory'

salary levels before BPO & IT boom in India was (say avg.) 2L p.a. & cost to buy a good house was about 20L then. Now today if the avg. salary is about 4L p.a. then good house should cost about 40L, however that's wasn't the case in 2007 & that's why Prop. prices were correcting itself.

But I think it has crossed this mark now. Today even a smallest 1RK in Mumbai western suburbs cost 30L, a good house (800-1000 sq.ft) costs 80-100Ls in the same locality.

So according to this affordability theory buying a decent house should take 10 years of your gross earnings. At today's prices it takes your 20-25 years of gross income. (note: I have not discounted these to inflation levels, else it could even go to 35-40 years of income)

It's a madness. I want to buy a house & can't afford it everytime I feel.

Let's take a real eg. I enquired for price of a 1BHK (500 sq ft)in a good suburbian locality in Oct'09 & cost was 40L, I thought it was high & didnt go for it. Today when I inquired for the same area in the same locality agent told me it's now 55L.

I couldn't believe my ears. A jump of 15L in 2.5 months.

Is it realistic????

Such rises are not market corrections, it can't be even developmental. It's pure speculation.

It's builder's & agents lobby at work.

Homes at today's prices are simply unaffordable to majority.

Venkateswaran K Iyer said...

@Anon 12.59

Mumbai RE is high because Mumbaikars are not able to live anywhere else except Mumbai and are willing to pay a premium for it.

Otherwise buy a palatial house in Nasik for 50L and be happy in your retirement!

But Mumbaikars will never do that. They want their Mumbai. They cannot be happy anywhere else.

They can easily afford to buy a palace in Delhi/NCR also. But they dont want to live in Delhi

So things will be like this only.

Anonymous said...

Dear Mr. Iyer,

U r right.

But, this was true even 10 yrs down the line.

This couldn't be the reason why sudden jump in last few months.

Anonymous said...

Sorry, I meant that was true even 10 years back & is gonu be true even 10 yrs down the line.

the Q. is given this fact, can u say prop. price will keep rising at this rate year on year?

without correlating itself with the rise in affordability?

I doubt.

Anonymous said...

Anon for Australia:

I would not trust World Bank/IMF for any figure. Their job is to shit around the world and create bubbles.

I've bought a house in Melbourne in 2001 which was $220K. It went as high as 650K in 2006-7 and after the recession/stimulus again it went more than its peak price.

If you think there is no bubble in this, please buy my house at 700K.

Also, major Australian cities were infested by investors from Europe and Japan. When it all unwinds, it will be very ugly.

Btw, they killed another Indian student this week there. What a shame on Australians. They can't protect innocent Indian kids.

Anonymous said...

My dear bloggers:

We are in Great Depression 2.
It has happened in US and is coming to Asia in 6-8 months. The massive greed and ponzi schemes of builders, bankers, share market will come to an end in a few years, starting by mid 2010.

Anonymous said...

Anon at 5.14am,

I do agree with the fact that worldwide govts are working in favour of builders and this has resulted in inflated house prices which are not sutainable at all but there is a big difference in developed world's (US, australia etc) real estate market and that of developing world ( india, china etc.). e.g I can clearly see that in India, prices are inflated by 300-400% but this is not the case in Australia.The median house prices in Sydney are 500K which may be inflated by 25% maximum in general not 300%. 25% is a big figure in developed world and yes australian real estate is in a big bubble at the moment.
House sales in Australia are registered properly and one can find history of sales for different suburbs in different states. Please look into www.rpdata.com

I would like to request viewers of this blog to go through above site at their available opportunity and decide who is right - me or anon above.

By the way anon above- why are you mixing 2 issues, autralian real estate and killing of an indian student in Australia recently??

maaproperties said...

Will RE boom continue or Bust start

Anonymous said...

Anon at 2:56

Killing of Indians in Australia could imply that Indians should pack up from there and go to better places like US or Europe where their skills are respected and they are safe. Basically sell their RE there and move on.

Venkateswaran K Iyer said...

@Anon 2.45 and 2.48

My point is that Mumbai RE will always be 2-3 times higher than the next most expensive destination in India, say Pune/Chennai/Delhi, whichever.

Mumbai has the money and the inclination.

It has always been like that for 60 years

Anonymous said...

Does a chennaiite want to live in mumbai if he can buy a palatial home?? No way.

Same goes with Delhiites and those from every other majo city in india??

Every city is dear to its ihabitants....and that can never be a reason for paying though the nose.

I suppose mumbai will have its premium rates because of it being a commercial capital, but to say the high RE is because its citizens lke to stay in that shit hole is more of a stretch and definitely a sophistry.

Iyer, change the track.Your tack would not sell among informed people.

Anonymous said...

If you want reliable predictions for the coming years for the world, google "lindsey williams predictions"

You are sure to be surprised. This will help some of you to plan future. God Bless

Bid4dream said...

Its true now a days we can find any dame thing on the internet

with quite ease. However just think is there anyone who can

offer you maximum discount on any product which you wish to

own?
Well

Bid4dream
is here to realize your dreams now. Now its

possible to grab maximum discount on any product which you

wish to buy. All you have to do is to grab the opportunity.

Ankan said...

This is very well written post