Tuesday, July 6, 2010

Indian property bubble

The Indian Property Market has been growing fast since March 2005, when the current UPA government resolute to open FDI in Real Estate.

Some have suggested that given India's population density is closer to that of Europe than that of America the real value of Indian Real Estate should be close to European levels rather than American levels. When looked at in that way Indian real estate is still cheap. This divergence assumes the rapid economic growth in India will have brought per capita income in India to Western European levels within the next 10 years in urban areas.

Affordability is the most imperative factor when it comes to housing prices and middle class housing is much levels of affordability in most of the major cities in India. People who compare India with developed European cities, forget the huge difference in affordability in both areas. Of course there is a huge stipulate for housing but they can only buy what they can afford.

Lack of efficient signals to market contributor means that there will be periods of mismatch between suppliers and buyers hence leading to cycles of booms and busts.

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