Hi All - let's talk something about future of India by looking at history of economics and current business trends.
Also we need to understand price hikes and massive inflation going on in our country.
Also we need to understand price hikes and massive inflation going on in our country.
I was in US for last 8 years and owning a house when housing market crashed over there. At the same time my uncle was there in Ireland and he not only witnessed but also fighting with it till date.
This is what happened with US – in 2006 some economist said that there is no issues with economy of US, there are no TAX we are expecting we have great housing market and we have lot of assets in the country. But at the same time, in the same interview another economist was telling completely reverse thing – he was Peter Schiff. According to Peter in 2006 itself that recession is on the door and it will going to hit the market any time. It happened in 2008.
I bought a house and luckily I was able to sell it on same price, however in my area (Chicago Suburbs) there was nothing much in difference as houses were not of that hipped prices. But in VA and CA and many other states house prices were on top because of no reason. It fell down, one of my friend’s house of 365K went down to 225K and this is nothing as compare to CA house prices.
In Ireland it was more difficult – houses were at top high but after 2008 there was no buyer – whatever price you want to put in. My uncle is moved to Canada now but still having mortgage of 2 houses in Ireland which he is not able to sell and even rental is also very difficult there.
Now about India – I came back here on 9/9/9 it’s been more than a year now and I am seeing the same condition here. Moreover India is going to get hit very badly the way it is progressing. There is no production out here, we are just outnumbering other countries otherwise if you see there is nothing which we produce and it signifies something.
We are looked as big market because of our population but see this 100 people are working and production is equivalent to say 10 people in developed countries. Now if we try to distribute this 10 into 100, the distribution is also not even – first 5 will take most of it and after that distributed and 50 out of 100 will be in poor category. Unless we increase productivity we will see very adverse effect in our economical and social front.
How do we justify prices of anything in our country – there is no way it should be. If we keep on doing this, the wealth developed by this will be taken by most of the MNCs – its matter of few years.
Prices mainly depend on demand and supply... India real estate market will boom for sure because of increase in the earning members of the family. If you look at our time when we started our job we hardly got any salary to fulfill our necessarily while on the other side if you see the pay slip of a fresher’s you will be amazed to see how they will spend so much of the money knowing that their parents are still able to give them pocket money and hence this result in the investment and the increase in demand. Now this demand is generating from the high medium class family and this will grow to the low medium class family and then below because everyone is earning and opportunities are exists in the open market. This means that six family members now need six different home, think about the India’s entire population and the demand hence investment in Real estate market is beneficial in India.
ReplyDeleteThat is true - but pay slip of a fresher does not mean we are growing - that also mean that value of our money is deteriorating drastically.
ReplyDeleteYes, our life style is changed and got lot better but the amount of work we are doing and way life style is changing does not match up.
This all PaySlip thing started because of outsourcing efforts, remember old days when in software also we were dependent on local projects? still it does not add up your salary with any of the local project? why?
About Six family members need six homes - it is difficult to see that - I can see people owning lot of plots and flats when they don't have to live in there. Right now it is a fashion not requirement. Once it comes to requirement there is very less demand.
1) Neelesh...I agree with you there is a bubble for sure in India and for sure home prices will correct if not crash depending on the locality. After all housing is local. I am living in Pune paying Rs 14000/- per month for a at least Rs 60 lacs apartment. That is like paying 2-3% interest on a hypothetical loan of 60 lacs with zero liability. Even if I have a CASH(which I don't..:( ) Rs 60 lacs it does not make any sense to buy because even a bank FD will be give me Rs 48000/- per month interest...:) It is ridiculous the rents are so low. Either prices should come down or rents should go up or both needs to happen to make any sense here.
ReplyDeleteBelow is just a start...:)
http://www.financialexpress.com/news/april-property-sales-in-mumbai-down-30/793699/
2) As far as productivity thing about Indians v/s west is concerned sorry I do not agree with you. I agree 100% if you are talking purely IT but it is not just IT in life. I remember in Boston they took almost 2 years just to paint a old bridge....:) crazy in India we would have built 2 of them and in China probably a dozen..:). We are very very productive except in IT...:). We are spoiled there for example Apples strength is like 50K and Infys like 2 lacs but you know the difference....:)
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ReplyDeleteThanks for your comment -
ReplyDeleteI missed the first part which you have covered very nicely. Yes - I also got amazed with this fact that mortgage and rent has no relation in India but that is due to inflation rate which covers rest of the cost. Once that stops, rent will go up and it will balance it.
About # 2 - I am talking about productivity and yes in NON IT - I can see many people who can work well are not producing anything. Call a handy-man in Pune and you will come to know what I am talking about. If you talk about research also - I know people in research field who always worry about the increments which happens every 3 year but don't think they have environment which makes them care about research leaving rest everything behind. But same people I know in Chicago LAP and Water Research facilities never talks about money always busy working on something.
Unless we produce something not just consume it will be difficult to get out of this situation. China is different - they work on production of large scale.