Indian real estate: boom or bubble? who has the benefits???
December 17, 2006 11:43pm CST
Property prices in India are rising fast, and not just in the biggest cities. As the tech boom spreads across the country, as more Indians buy homes, and as the economy grows at faster than 8% a year, real estate is attracting more investors, many of them from abroad. Concerns about an asset-price bubble have led the Reserve Bank of India to raise the risk weightage on real estate loans extended by banks, and mortgage rates have gone from 7.5% to about 9.5% as a result. That's still well below the 15% rates that most Indians were used to, but it's enough to raise questions about whether the speculation of the past year and a half, which has driven land prices up by 30% to 100% and real estate stocks up as much as 2,000%, may be coming to an end. The rising prices of houses is making it hard for the middle class to own a house and thus have no choice to either get money from bank at the interest rates being set or give a part of there monthly salary on rent which have also sky rocketed over the years. The only benefit is to either who were lucky enough to own a house from long back in time or the people who were already rich and have a no. of houses thru which they r becoming more rich by given them on rent. so is the dream of middle class people to own a house wud just remain a dream with the real estate boom or is this a bubble which wud burst to do a economic harm and a social welfare???