The other day when getting my property papers and stuff organized, I reminisced of my property buying days and how crazy they were. Probably the most hectic and money-draining phase of my life. Also learning for
Mumbai today boasts of the most expensive properties in the world today, and also probably the most mal-priced properties too. Flats out here in prime areas can easily cost $ 1 million. That too just 3 BHK or 4 BHK flats! In the west, you would easily get a 10 bhk house with a garden, driveway, big garage, backyard, pool etc. in a city suburb for that price! Buying such a house in a city suburb in Mumbai would probably cost you say $3 Million at the least! Strange, considering the fact that Mumbai usually finishes last on lists like "The best cities to live in". In a survey that had been carried out a few years ago, mumbai ranked 127 out of 130 on such a survey, the followers being mostly Pakistani & African cities. The #1 city on that survey was Melbourne. So what can explain the meteoric price rise in the property market in Mumbai?
The following few factors contribute to the price rise.
Builder Cartel:
This is the no. 1 reason for the prices shooting up. The builders are manipulating the property market to take the prices up. They have realised that the IT professionals & call centre employees have started getting hefty salaries, that would enable them to invest in expensive property. Hence they push up the prices to insane rates. Then they suddenly bring it down a hint. This attracts the standard property buyer, who usually is waiting on the fence for a drop in prices. What he doesn't realize is that though the prices have dropped, the property is still very expensive. What he realizes is that the property wont come any cheaper, as once it starts to rise again, it will go higher than before. So all in all, buying the fat/apartment turns out to be a good decision for the buyer and of-course for the seller too.
Mumbai is an Island, hence limited land resource:
Mumbai is waterlocked, and is connected to land only on the northern side, and across the thane creek on the eastern side. As you go northwards in Bombay, starting from the south, the property prices reduce. South Bombay is like Manhattan, and the suburbs lie towards the north. Across the creek on the eastern side lies New Bombay. A few years ago, the only cheap housing available was in the north or in New bombay, but the prices here too have sky-rocketed. Prices in other metros like Bangalore, Chennai and Delhi are so much cheaper than here!v
The Indian IT success:
The Indian IT industry has boomed in the last 20 years. Middle class boys have turned computer engineers, worked onsite for a few years earning their monies in dollars & have much more buying power than the earlier generation, because of a larger disposable income. Young boys buy houses at an early age, thanks to home loans, and then end up paying large loans for 15-20 years. Because of influx of money into the burgeoning middle-class, the builders have figured out that they can charge a lot more than they actually were, and still sell flats!
There surely are many more factors to the property rise, but ive stated the major ones I felt like ranting about. Probably because I am going to be paying a hefty loan for a majority of my life. But then, such is life my dearies.
The following few factors contribute to the price rise.
Builder Cartel:
This is the no. 1 reason for the prices shooting up. The builders are manipulating the property market to take the prices up. They have realised that the IT professionals & call centre employees have started getting hefty salaries, that would enable them to invest in expensive property. Hence they push up the prices to insane rates. Then they suddenly bring it down a hint. This attracts the standard property buyer, who usually is waiting on the fence for a drop in prices. What he doesn't realize is that though the prices have dropped, the property is still very expensive. What he realizes is that the property wont come any cheaper, as once it starts to rise again, it will go higher than before. So all in all, buying the fat/apartment turns out to be a good decision for the buyer and of-course for the seller too.
Mumbai is an Island, hence limited land resource:
Mumbai is waterlocked, and is connected to land only on the northern side, and across the thane creek on the eastern side. As you go northwards in Bombay, starting from the south, the property prices reduce. South Bombay is like Manhattan, and the suburbs lie towards the north. Across the creek on the eastern side lies New Bombay. A few years ago, the only cheap housing available was in the north or in New bombay, but the prices here too have sky-rocketed. Prices in other metros like Bangalore, Chennai and Delhi are so much cheaper than here!v
The Indian IT success:
The Indian IT industry has boomed in the last 20 years. Middle class boys have turned computer engineers, worked onsite for a few years earning their monies in dollars & have much more buying power than the earlier generation, because of a larger disposable income. Young boys buy houses at an early age, thanks to home loans, and then end up paying large loans for 15-20 years. Because of influx of money into the burgeoning middle-class, the builders have figured out that they can charge a lot more than they actually were, and still sell flats!
There surely are many more factors to the property rise, but ive stated the major ones I felt like ranting about. Probably because I am going to be paying a hefty loan for a majority of my life. But then, such is life my dearies.
