India Real Estate Bubble Bursts As Transactions Are Down 50 Percent
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India has had a raging real estate bubble form the past couple of years as demand has been through the roof and organized crime has made inroads into the real estate community. But now it seems the party is over and demand has dropped like a stone.
We think things have slowed down in the United States, take a look at India where demand has dropped 50 percent in 2 months. Now thats a housing bubble.
India’s once-buoyant real-estate market has gone into a deep freeze with more than a 50 per cent drop in actual transactions over the last two months, developers and real-estate analysts have said.
For the first time in three years some developers have dropped rates to bolster demand. A nation-wide survey reports a drop of between 5 to 10 per cent in rates across edge suburbs like Kharghar, in Navi Mumbai, Greater Noida in the National Capital Region and Bangalore’s Hosur Road.
Developers on the fringes of the big cities have found it hard to hold the price line. Cheaper land also allows them greater freedom in fixing profit margins. However, within the metropolitan cities, developers have withstood the plunge in sales and held their price lines. In prime locations and exclusive buildings, the price spiral is intact. via the Hindustan Times
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Maybe it was kryptonite...
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By Mike ...
I couldn't agree more.
The newspaper has always "stuck" it to the real estate agent with rates that were much higher ...
By the way, homeowners trying to get short sale approval should be aware that lenders are comparing the initial loan ...
Ouch! Thankfully I haven't come across anything like that yet. We normally don't have situations like that in ...
well, the guy was here illegally.
serves him right. 
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not bad 
Comment by Rahul on 30 May 2007:
Many people argue that there is no boom in the first place.
The absurd raise in real estate prices they say are attributed to the ‘investment thing’ created by middlemen fuelled by middleclass buyers to get rich fast. So, most house owners of the year 2004/05 did not buy their houses to ‘live in’ but sell them afterwards.
What costed a mere Rs2000/sqft 6 months ago shot up by 400% to Rs.8000/Sqft and then.. someone blinked:), ..there are no takers. Only an investor with crores of rupees can invest in properties worth rs.8000/sqft - not a middle-income household / salaried employee.
As investors sensed the downward slide, they quietly pulled out of the market. So , we have a property tagged at rs.8000/sqft middle class households who are 10 times as scared as a rich investor to invest their life savings, shut their doors.
Add to this the sudden raise in homeloan interest rates and at the same time raise in savings bank / FD interest rates which has been a constant and safe source of income for the middle class - you have a perfect recipe for a real estate melt down.
Not a good thing, but many say it will go all the way down burning all that artificial flab created since the year 2001/2.
Comment by Dave on 20 May 2008:
I have been following the real estate forums intently.
Few collated truths in point form below……………
1. Prices are artificial (never thought Gurgaon/Pune will be as expensive as US/UK)
2. Only a miniscule 1 or 2% of the population can afford these houses.
3. Those who get caught in this trap and buy a 50 Lac pigeonhole on the city fringes are consigned to a life of endless EMIs. Maybe we’ll soon have the Japanese model wherein you can pass it on to the kids coz the extended repayment periods (courtesy rising interests) will outlive you.
4. Appreciation is over if you buy now. If you think your 50 Lac thing on the outskirts with no proper road and water/sevage/security is going to become more expensive then a mediterranean villa in 5 years….it will be a miracle. Yes….anything can happen in India. When you have a large population, you also have a proportionatly large number of fools.
5. You can’t get a loan / tax rebate for paying rent. You got to pay it out of your salary. So rents will continue to be a paltry few thousand, even if your 2BHK is of half a crore or two crore or ten crore.
And a few truthful fantasies in continuation……………
6. How many houses will an NRI / Businessman / IT Professional Buy want to buy? Two, Three, Five….maybe Seven?? When all those many houses are constructed and sold (and these many are being built all around us)….but what then? Will we have ghost towns? Empty townships with no residents but empty 1.5 BHKs worth 1 crore each?
7. Has anyone thought about socio-economic fallouts? Middle class salaried families turning naxalites? When you can’t even buy a decent house when the economy is booming, would you not want social justice?
8. A long term cycle like Nepal? A revolution?
Comment by Venkatesh on 19 August 2008:
To Dave:
You could be right, but have a bit of humilty and indicate that these are merely your “guesses”. If you are so sure, you would short the housing stocks and REITs and make tons of money with the crashing house prices. I bet you are not so sure after all when it comes to your money. Giving advices comes easy, but when you back it up by puting your money then I can consider these advices.
Comment by Aju on 20 August 2008:
What Dave tties to bring to light is true. When you have absurdly priced housing such as 60l for a 2 bhk in the out skirts of Trivandrum or in Cochin, it sure is a bubble (forget Mumbai and Bangalore). Wait and see for how long the investors can hold.