Housing Bubble building up yet again

As Times Property screams Confidence returns, as money is being pumped into super exclusive 2 Crore plus price tagged properties in Mumbai and Delhi by the builder lobbythanks to the grip of the builder politician nexus, one wonders who their target audience is?

Is it the ill gotten gains of politicians and officials from the CWG and other govt schemes perusing these properties or NRI money or is it genuine demand ?

In any case a cursory glance at property rates indicate that prices have more than doubled in last 3 yrs pointing firmly to a bubble backed by the govt which allowed watering down of the NPA norms in banks and the RBI which gives lip service to inflation while pursuing a  loose monetary policy and allows debasing of the Rupee.

History and the recent American crises has shown how such a policy of artificially low interest rates can lead to high inflation and a multi-year bubble in asset prices be it of Real estate or of commodities like gold,platinum silver and copper.

The govts  haven’t learnt lessons from the last bull run, and why will they? They are neck deep into real estate, as many politicians are themselves builders or have a deep nexus with them. This is a very rewarding game for both the administrative and political class.

The risk for the current buyer is in the not so distant future when both the US and the EU will eventually have to start cutting on the loose monetary policy and start to increase interest rates.

Read

‘Property rates becoming unaffordable for average buyer’

Need to build more homes in Rs. 15-20 lakh range: Deepak Parekh.

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