Social. Political. Economic. Career| Seyed Ibrahim

Serious issues & ideas. Trusted Sources.

Real estate prices come crashing down. Really?

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You have read (or seen in TV) news items with titles like “Realty prices show major decline”, “Low interest rates: right time to buy land/house”.

These are not completely right. Here are a few comments (I edited a bit) from Economic times. It seems some newspaper editors / journalists get a second income from the big real estate guys.

Unnikrishnan Nair, New Delhi, says:  This strategy works this way. Spread the rumour that property prices are falling down and going to revive the economy by next 3-6 months. Then an eager customer approach a builder. Builder will say that those reduced prices part of history and now since the market is picking up the prices have again gone up. In between, they may get some customers at the high price and they can pull on

Rajiv Abraham, Trivandrum, says: Beware of the carrot of low interest rates being dangled by the bankers. As for the Govt and the developers, they want us to spend more than we earn by borrowing and then expect us to sweat it out all our lives repaying the debt so that other folks can get filthy rich. The argument is that it creates jobs but it also creates DEBT to get out of which we have to slog all our lives.

Murty, Hyderabad, says: Price Corrections? Never! Say you intended to sell 10 items @Rs.11 each. You intend to get a profit of Rs.10 as a whole. But you offered them at Rs.22 each and only 5 of them were sold in a hurry. The remaining 5 are still with you.You got what you want (Rs.110) and still left with 5 items that you can sell at Rs.22 or Rs.15 or Rs.10 but never less than Rs.10/. Cash flow problems? That is nonsense.This is being the brainwork of the journalists who are being paid to write like that.

shishir , bangalore, says: Why are the real estate guys are thinking that if interest rates will fall, people will start buying. Falling interest rates is a mirage. In an extended period of 20 years where floating rates would go up and down, low interest rates in one year won’t affect the outgo of an individual as it is possible in the next year, the rates might go up and he might shell out more.What will help is if the total outgo i.e. cost of the flat is reduced.

Also, see my another post: Real Estate: In denial of depression/

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