real estate to crash soon
April 7th 2008 14:49
The real estate market in India is poised for a major crash too. Guess why? When prices of property began to rise in India nobody bothered to find out why this was happening and happily went ahead and invested money in flats and plots. Today they are priceless, but despite this are there any buyers? Unfortunately not. Jest a few months back Rajnath Singh the supremo of the Bharatiya Janata Party ( the oppositon in India) had expressed grave concern over the erratic and volatile behaviour of the stock market. He had also stated that the Congress Party and P Chidambaram in particular seemed least bothered by the sudden spasms the market was undergoing. Rajnath said there was a problem somewhere. But everybody present in this press conference in Lucknow laughed at him. This included several senior journalists. Everybody thought the bull run would last forever. Then came the debacle of Reliance Power and after that when the stock market crashed in America so did the markets in India.
Now the real estate market is in a tailspin there. In a matter on months the real estate market should crash in India too feel stock market and real estate market watchers. There is a great mismathc between Indian incomes and the price of real estate which is obviously being driven by black money. This is leading to several problems. People can jack up prices of real estate by investing black money in it but then this automatically excludes the biggest spenders in India, the middle class that survives on loans from investing in flats and plots all of which they need to buy in white. So who is doing the investing. According to government sources this is the drug mafia, the terrorists and the foreign agencies. As a result when these agencies decide that since there is a recession in the US and they should invest there then the prices of property will take a tumble in India.
This has happened before. When the BJP came to power as the NDA both the stock market and the real estate market flattened out. Flats that were selling for Rs 70 lacs came down to Rs 35 lacs. With the Congress coming back into power flats rose to a crore in Delhi. But now the boom seems to be ending and the bust is just around the corner.
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