Housing prices likely to rise 15%=>article extract Just FYI

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Housing prices likely to rise 15%

Housing prices, which have cooled down from their peak, are expected to rise by 15 per cent in the next one year on the back of increased demand, a report said.

"We expect residential prices to rise 15 per cent from the bottom over a one year period," Investment banker JP Morgan said in its latest report on the realty sector.

After falling 25-30 per cent from peak levels, property prices in India are showing signs of stabilisation as volumes have picked up significantly, it said, adding, 'we see this as a precursor for price increases to start flowing through'.

With projections of India and China outperforming global markets in the coming years, with blistering growth rates, reports say that the real estate sector is likely to benefit the most.

With property prices dropping a bit after recession hit the world economies, the Reserve Bank cut its key lending rates prodding banks to cut home loan rates. This move and signs of some stability in the economy and job market, led to demand in the real estate market growing.

However, now at the slightest hint of a rise in housing demand, builders are again on the verge of raising prices.

JP Morgan said, if the sale during festival season is substantial, then 'there is a good chance of a 15-20 per cent appreciation being undertaken by developers'.

Strong volume offtake in new launches, low real mortgage yields, marked improvement in the job environment and limited supply of 'ready to move in' are some of the reasons, which have started to drive housing property rates upwards, it said.

'Job security is now much better and this should enable first-time home buyers to commit to house purchases. If salary increments in January-March 2010 are much better, one can expect a very direct benefit to the housing sector,' the report said.

Indian property market witnessed huge slump in demand during second half of 2008-09 fiscal, forcing the developers to focus on affordable housing to boost their sales. The shift seems to have paid dividend as sales in the low-income segment have improved.


Indian property market witnessed huge slump in demand during second half of 2008-09 fiscal, forcing the developers to focus on affordable housing to boost their sales.
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[msn1270]

once again lobby by the Real Estate Developers to create Panic among the People who are waiting for some more southside of the Real Estate Prices. If thats the case of Increasing demand, why are they approaching the Government to Reduce the Guidance Value to attract the Buyers.??

Just because the BSE Sensex raised from 13000 to 16000 doesn't mean that Real estate sector is getting attraction again. Already Chinese Housing market is getting ready for bubble and all their national banks are worried about their NPA's.

Just b'cos these RE Players are unable to get any other source of money to complete their exisint projects are clear the debts of the lands they've purchased in the peak time, they're trying to black mail the buyers, so that they rush to buy their overprices properties and inturn they utilise that money to complete their existing projects or clear the loans and royally screw the newly booked customers for much much longer period.

Guys, don't worry about these things. Just wait for some more time.

[parkom]

It is true that the real estate agents and builders are trying hard to build up a hype about "demand picking up". Yes, inquiries are up as people are checking out how much more downside is there to the prices but an inquiry is definitely not an order.

[MNRS]

I guess in some areas, and for plots the demand is picking up. But people are spending a good time on selection and taking a decision, particularly for the apartments.

Recently about 2 wks back MS Ramaih North East county launched and within 15 days they have sold all the regular plots and now only odd sized plots are available for sale.

[vinayjan]

Its just the usual hype. Hang on for some more months. US Dollar is shaken out of its wits. once that happens,
the economy will reach a stable state depending on a lot of factors.

[msn1270]

in one of the india's weekly's recently conducted surveys disclosed the reality that, some of the major builders/developers including Sobha, Dlf, Purva...etc are artificially creating the demand and also launching new projects in the name of affordable housing just to mesmerise the buyers/investors and collect the money to clear their dues to the banks for their previous projects, which they're not able to sell to to clear the loan which was taken for purchasing the huge landbank at the peak time. Same reason for dozens of Real estate IPO's like Lodha developers, Godrej properties, Emmar MGF, Nitest Estates, ...etc lined for opening in the stock market mainly to clear their earlier dues, not for investing in their new projects.

This is definitely a negative blow to the real estate market, as this will delay or postpone the completion of the newly launched projects and the investors/buyers will loose their money value and not able to get their dream homes in their expected time line.

Also due to increasing Inflation, the RBi is going to take steps to curb the same by incresing the CRR,Repo, PLR rates in the coming months, which will again restrict the Banks to prioritise credit to the retail housing sector, which definitely impacts the much hyped projections of the real estate screen saver.