Real Estate : Formally defined as Immovable Property with land , buildings and natural resources like crops, tress, minerals or water etc. Generally real estate refers in common use to Personal & Business Buildings or infrastructure .

Real estate pricing means the valuation of real estate and all the standard methods of determining the price of fixed assets.

Real estate prices have been matter of great concern and attention for many since past many years, not only purchase decisions, but many investment decisions now a days are dependent on real estate prices and it is difficult to predict real estate prices for the long term.

Real Estate Prices are identified to be dependent on following parameters :

  • Demographics
  • Interest Rates
  • The Economy
  • Government Policies/Subsidies
  • Global Situations

If we talk about India at present, than from left to right and top to bottom, there is no city or village left out under the effect of huge real estate prices. In spite of over all slowdown in Indian Economy, India saw huge increase in Residential Prices. It is estimated that India would see the trend of prices being increased in coming years too.

Some Statistics :

  • India ranked 2nd out of 50 countries for annual growth of residential prices at Knight Frank’s latest global housing price index.
  • During year to Q1 2011, house prices rose 21.3%.
  • Residential prices rose in most of cities in India from Q1 to Q2 2011.
  • Property prices rose in most of  cities covered by the NHB.
    • The top five were Bhopal (46.41%), Faridabad (44.74%), Chennai (35.52%), Bengaluru (35.29%), and New Delhi (33.64%).

Now are the increasing real estate prices a matter of serious concern for us all, Perhaps YES! It is, here are some insights:

  • The Economy overall is not performing that well.
  • Even the superpower U.S is suffering from losses.
  • As the prices are increased unexpectedly, many customers who really want houses are refrained and there are Big Holders who have kept multiple houses on hold for investments.
  • A type of virtual supply crisis type situation is formed in the market.
  • There is no sort of Government intervention regarding the same, Government gets its duty and taxes and is more than happy with it.

Also this are some effects we can expect ahead :

  • Due to more increase in prices and income being stable , there may be less of genuine purchases.
  • The rents would also increase and hence those who do not have their own infrastructure or have shifted temporarily to other places may suffer from it a lot.
  • Also there would be sort of effect on prices of other commodities and related items like furniture, raw materials, other houseful needed commodities, and gradually every thing may seem to be increasing.
  • And hopefully the Government would intervene someday.
  • Or we can also expect this price bubble to keep on increasing and increasing without control and to burst one day when the things would automatically go beyond control and there would be extreme difference between demand supply ratios.
  • And than the things would start again nicely! Hopefully!

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Thanks & Regards,

Deep Bajaj