Mom: Son, property prices always go up, Why don't you invest in real estate.
Dad: I know you have already taken a house, but what is the harm in buying a second house ? It is an investment which only appreciates
Relatives: You have not yet bought a house/ second house ?
Friends: Take it & keep it, you are a rich guy... You cannot trust the stock market. Real Estate you can actually touch and feel it
So these are the arguments that go for any individual. People coerce and push you to the limits to acquire either a single house and if you have already bought one, a second house! Do you succumb to the pressure?
I always make it a point to visit each and every property exhibition @ Navi Mumbai... for one my wife loves the stick ice candy and they are typically sold @ these exhibitions, and two we get to see how a 10X10 sft room is made to look like a palace through smart interior designs, though that is not the purpose for which the exhibition is held.
Beyond this, I have been noticing that the participation of the crowds is only thinning and the number of exhibitions are only increasing... Does this mean that the supply is more than the demand ? Seems so!
When I visited Shanghai, Tokyo, I noticed that the residential buildings are really skyscrapers and the buildings in Thane, Navi Mumbai dwarf in comparision! A logical question is, if we do not have space laterally, why don't we build vertically ? The answer is the FSI in Navi Mumbai is pretty low. Question no 2, Why is the FSI low ? A possible answer is, the prices drop like a stone or the construction quality is not good enough to warrant skyscrapers.
I also noticed that the property prices in Mumbai prime location like Nariman point has only come down! We had an office in Nariman point which we had acquired @ 35,000 INR per sft back in early 2000. Reccently concluded the deal by selling it @ 29000 and that too to a SOBO (South Bombaite) as they fashionably call themselves. The prices were actually hovering @ 27,500 - 28000.
This brought me to another conclusion. We Indians are an emotional lot when it comes to personal property buying. This guy was buying the property for his son in the US who would come back and setup an office. Instead of looking @ BKC or any other upcoming location he was hell bent on Nariman point as it was a booming district in his growing up years. So the conclusion from the above two is that:
Property prices do go down
We make emotional decisions and inflate the price
Apart from this there are numerous anecdotes I can share where the property prices have infact come down. My brother in law was in 2007 a proud owner of a brand new flat in I town area of Visakhapatnam, bought @ 90 lacs odd. In 2009 - 10 a dispute between the Indian Navy and the port trust started wherein the port wants to expand. So the property prices have tumbled in the I town area. You certainly cannot predict such situations.
Last but not the least, whenever you try to buy property, there is a white component and there is a black component. The black component is the invisible money, builders give you multiple reasons for the black money component:
It will reduce the cost of registration
It is for the higher ups.