Houses Crash

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April 19th, 2009 Praveen Bose

It was some crash about which I heard today. A friend, I have known since the early ’80s, is in a state of near-shock and, now laughs and cries at the same time, by merely thinking of what’s happened to their investment.

Imagine in investment of yours crashing about 60 per cent in just over an year. She had bought a flat for Rs 75 lakh. It was meant to be an investment. Everything was rosy with the real estate then.

The ‘experts’ in real estate always say “location, location, location” when you consider buying a property. That is precisely what she thought when buying the flat. After-all it was barely 10 or 12 km from the international airport, which is very near to the airport for someone familiar with Bangalore.

About a month or two ago, she tried to find out what’s happened to her investment now that there are frequent news reports about the property market bouncing back. She had missed the opportunity to sell when the market had peaked, she thought. On trying to sell their property. instead of earning a profit, the highest price being quoted was Rs 30 lakh. They had rented out the flat and are now happy with whatever rent they are getting.

That left me wondering what must happened to the ‘investments’ at the other end of the city where there is not even water. The borewells have dried up. Many of them are high-end flats going up to Rs 1 crore or more. Today they got no water and any water they get is supplied on water tankers.

OK, back to my friend. She’s now praying that the hopes of a ‘V’ shaped recovery happens in the property market as many hope will happen with the general economy. But, that could take time in case of the real estate sector.

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2 Responses to “Houses Crash”

  1. Guha Rajan Says:

    An industrial term loan is mostly provided for the period of upto 7 years. Such being the case, it not a wise decision on the part of consumer to go for 20 year home loan.

    We are all living in a dynamic world and everything can get changed in less than a 1 year time. All the Indian industry are now feeling the slowdown in the Indian economy and nobody is able to predict as when this would get over.

  2. An Outcome Says:

    This is the typical herd syndrome ! that sweeps all that comes it’s way. When people are not able to resist the urge to apply common sense in realising how much can a bubble expand !!


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