However, this still stands at almost two to four times the value of property elsewhere in Ireland. The data is contained in the latest Irish Independent/Real Estate
Are Pune property prices coming down more in 2017?
Real estate in India is overpriced, while rental yields are too low to make sense as a good enough investment.If the property market were to function as efficiently as the stock market, real estate prices should crash, but the market is rigged.The fundamental reason why property prices have to fall is because they are no longer affordable to the vast majority of Indian middle class households.
In 2015, four percent fewer homes were bought in eight of India’s major cities – Delhi/NCR, Mumbai, Bengaluru, Chennai, Kolkata, Pune, Hyderabad and Ahmedabad. These cities have 7 lakhs units unsold, an inventory backlog that will take at least two or three years to clear, assuming no new units are built.
That isn’t happening, for builders are forced to announce new launches in order to ensure cash flows that can be ploughed back to complete previously sold properties. In short, they are into a recycling game, using new property sales to fund old ones. That’s why they lure you with 20:80 and 10:20:70 schemes, or ask you to pay only Rs 2-3 lakh for booking, and rest on possession. They want the upfront cash in the hope that prices will rise after a while to make this worthwhile.
Take another measure: rental yield on residential property – the annual potential rental income as a percentage of its market price – is so low in India, that it makes no sense as an investment. Of course, returns will have to include the chances of future appreciation, but this means investment is being planned purely on expectations of a price rise. What if that isn’t happening too?
In any rational property market, rental yields ought to be somewhat in sync with borrowing costs. So if the housing finance companies are lending you money to buy a house at, say, 9.5 percent today, you should be earning at least half that by way of rental yield, hoping to make up the other half through capital appreciation.
But in most cities in India, even on the periphery, rental yields are in the range of 2-2.5 percent. I bought a small 1-BHK flat in Thane (a satellite city north-east of Mumbai) two-and-a-half years ago and the rental yield is currently around 2-2.5 percent. I bought the house to live in, but if I had bought it as an investment, I would have been better off leaving my money in a savings bank account. I essentially borrowed money at a high rate (10.75 percent in my case) to earn 2.5 percent. If I had not bought it to stay in it, I ought to be a candidate for the loony bin.
So let’s get this straight: real estate in India is overpriced and simply not good enough as investment, and the anecdotal stories about the high prices some people got for their properties are really no indication of what might happen in future.
To buy a property worth Rs 1 crore, you need to raise a loan of around Rs 80 lakh. A 20-year loan at 9.5 percent would involve a monthly EMI of around Rs 75,000. To pay an EMI of Rs 75,000 (assuming you have no other loans for car, etc), and assuming Rs 50,000 monthly expenses, you would need a gross salary of at least Rs 2 lakh a month. And remember, to earn that kind of money on a 20-year loan, you need a remainder working life of at least 20 years. You can’t be older than 40-45.
Plus just yesterday , 500 and 1000 rupee currency notes have been banned in India , SO no one can inject black money to increase market price