House prices finally on the way down?
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It’s finally happening. The real estate market in India is cooling down. This is probably a breather before it snatches up its skirts and start trotting again. But nevertheless, what many people argued would never happen has happened. Prices of homes have declined not just in small isolated pockets but in large localities and across multiple cities.
The fact that this has happened at roughly the same time in different places is very interesting. According to me, it is good proof that real estate market is also a sentiment driven market like the stock market. After all, supply could not have exceeded demand in all the cities at the same time!
There is probably a bit of the FUD (fear, uncertainty and dread?) factor as well. With US real estate market showing no signs of looking up and most experts predicting the slump to last till the end of 2009, it’s no wonder that Indian home buyer has started having second thoughts. Check this piece for the latest on the US market – http://www.bloomberg.com/apps/news?pid=20601087&sid=aS8rWyvV0osg&refer=home. Quite informative. For instance, didya know that the average US home cost is now $200,000. That’s roughly 80 lakhs. For that price we can only get a semi decent place in Mumbai !! Guess, a reality check was long due.
However, our advice to those who are yet to own a home would be – BUY it now. There is no need to wait for the magic price on things as important as this. You may never get the extra 10% discount you were wanting. With tax deductions and all, it makes sense to invest in a home for the first time.
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