But for those worried this real estate bubble will burst, Lundquist says have no fear. Real estate broker Erin Stumpf agrees, saying we are nowhere near that …
Is the Real Estate market in India a bubble, ready to burst?
I feel the market is a bubble which would burst within the next 2 years (today is September 2013.) My reasons:
1) Excess supply of houses with very little real demand. Most of the purchase is driven from an investment point of view. The people who actually need a house find it very hard to afford at the current rates. The inventory is at an all time high in Bangalore, Mumbai
2) Increasing Current Account Deficit, Decreasing GDP, Increasing Fiscal Deficit => Disposable Incomes going down
3) The major driver for the Indian real estate market was the black money, but due to the coming elections there will be an excessive outflow of money to fund the elections, hence the demand will further go down (and supply will go up.)
4) Once the QE3 ends, the Private Equity investors would be pulling out – resulting in a fire sale in the mortgage industry. Also the interest rates in India would go up – making it difficult to finance new mortgages.
The combined effect of all these would result in the bursting of the real estate markets in the metros (which will extend to all other cities in India) and India might have it’s own Lost Decade in the years to come.