If you are planning to buy a house in 2016
, you need to read this...
If you are planning to buy a house in 2016, it is advised to wait and
watch the market for some more months. Real estate market in India saw a
massive boom in the year 2004 and the prices have hiked 7 to 8 times since
then. It is only after 9 years expansion cycle , it came to a halt in the early
2013.
Most of the people are unaware
of the real estate cycle of expansion and contraction, which artificially
creates inflation and deflation to plunge the huge wealth from masses and transferring
it to the elites pulling the strings. People riding this cycle appropriately
are benefited and working against are wiped off. This is in similarity to stock
exchange's bull and bear markets and stock pumping and dumping. The graph below
shows different phases of real estate cycle.
ref : http://www.dce.harvard.edu/
One can easily
understand that the prices escalate in a bull market forcing one to buy a home
at a higher rate ; wherein its actual value is comparatively less. If we look
at real estate prices in the whole 90’s
, prices remained stable for a decade. But the dramatic rise since 2004
indicates that the prices are still in bubble. The biggest enemy of common man
is the home loan which have made people its slave in the 20th
century. It is not a coincidence that ease of mortgage and high prices has hit
the market simultaneously. People, due to high rent are forced to go into debt
and spend their most of the income in managing a shelter.
Housing prices started
declining in 2014 due to low demand but newly elected BJP government led by
CM Devendra Fadnavis , dramatically under the guise of Mumbai development
plan 2034 ordered to stop new project approval. In addition to unsold housing
inventories , new supply would have further pushed prices down proving
nightmares for huge builders and ache din for common people. Prices have
plummeted 20% since 2013 and expected to fall further. In fact, one can find a
good deal at a bargain price at a local developer.
According to market
experts and analysts , year 2016 may face crisis and market crash similar to
recession of 2008. Oil price have gone record low around 30$ a barrel, gold and
silver are undervalued and middle east tension may impact prices further which
are still in bubble. US dollar crisis and massive deflation are few other
predicted events for 2016. It would be wiser to understand our financial
situation , market trends , future aspects and then take some concrete decision
because our best investment is our time in financial education.
Hope you find this
article helpful and do like, comment and share .
Zeeshan Sayed
Invest Mumbai
