News & Views on Indian Real Estate

Sunday, February 17, 2008

Relation between Real Estate and SEN SEX – Does it really makes SENSE ?

Sensex has a direct impact on the liquidity and sentiments of the average home buyer. Some anxiety has been found among the home buyers due to the fluttering of the stock market. If the downward trend in the stock market is accompanied with a fall in Sensex one may conclude real estate an asset class.

The stock market has driven the ownership rate at its peak in the history and the sales of apartments have also gone up tremendously over the past few years. Many people have been able to afford more expensive houses than they previously would have purchased. This way stock market has boosted the demand for housing.

Economists are concerned about the tightening of interest rates which may arise if the market continues to grow at same pace. So many expect the interest rate to soften a bit in the future.

The present market is dominated by actual users, Non-Resident Indians who are looking to buy property as first homes. It’s observed that matured investors and home buyers don’t invest all their money in buying a property. Most buyers just invest a percentage of their own funds and the rest being taken in the form of home loan which they pay over 15-20 years.

Various investors who use the profit which they make from their stocks for paying the EMI for their property purchase are the ones who are most affected ,as they rely completely on stock market for their earnings and profits. Again this could be a temporary phase but can have adverse impact during heavy bear sessions.

Some predict the lowering of stock market for sometime leads to the betterment of real estate. As there is a direct correlation between the property prices and Sensex. Over the past few months it has been witnessed that many builders have increased the prices in line with the Sensex. There has been a parallel growth, as the stock market grew real estate prices continued an upstream steady move.

If the stock markets remain low for some time, it will be better for the real estate market. The numerals for real estate losses will be much lesser than the stock market figures. Its also suggested that our homes should be kept away from the analysis and speculation of stock market.

The stock market gets a bit volatile during March as they depend on the third quarter results and expectations from the budget. Investors who are thinking of entering or existing from the realty market should carefully take into consideration their immediate and future need of funds for their proposed EMIs or investing in a property. It’s always recommended to be cautious before making such a huge investment.

Seminar John said...

A lot of the psychological well being of the American public comes from how well they’ve done with their house over the years. If indeed there’s been a bubble, and it’s pricked at some point, the net effect on Berkshire might well be positive [because the company’s financial strength would allow it to buy real-estate-related businesses at bargain prices

Anonymous said...

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Plz share more about India real estate growth in this ression