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The big difference between expectation and reality!

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The real estate prices in India have soared to gigantic proportions in last few years. The prices have soared as high as 300% in last 3 years. Although, consumer earnings too have grown, it is no match for the steep rise in real estate prices.

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I saw an interesting online survey conducted by MagicBricks recently on the aspirations of India online & the great Indian dream of owning a home. Results of this survey highlighted the huge gap between the expectations of a common average Indian and the reality of Real Estate Pricing. The survey also showed that nearly 60% of Internet surfers in India look for property-related information on websites.

Here are the findings of the survey:

The survey finds that more than 50% of Indians online are looking for a 2-bedroom house to call their home, and find the Rs 5-10 lakh bracket affordable. Of this, about 54 per cent users belonged to the megacities of Delhi, Mumbai, Chennai, Bangalore, Hyderabad and Kolkata. The remaining 46 per cent came from smaller cities and towns like Nasik, Ludhiana, Batala, etc. This search for their dream home leaves Indian internet users with homes normally confined to the extreme suburbs or peripheries of large and small cities. (Note: survey results based on 1000 online survey respondents)

More than 50% Indians are looking for a 2 bedroom apartment for less than 10 Lakhs !!!

Wow !! Thats a revelation to me.

Is it even remotely possible to get a 2 bedroom flat for under 10 lakhs? I don’t think so.

I have earlier written about soaring real estate prices in India and how I have a made a fool of myself as far as predicting the growth in real estate prices. There is interesting discussion going around on these articles (read comments on this posts).

Given the stock market fall and general relative slow-down in Indian economy on back of recession fears in US, I think it is difficult for real estate prices to rise any further. It seems just impossible (Although, I have been proved wrong earlier), I think it is high time for housing prices to atleast stabilize, if not go down.

  1. Anil says

    The fair price of home for a middle class person should not be more than 50 times of his monthly income. If we take average monthly income of average middle class household to be Rs.20K then his dream home should not cost more than 10.00 lakhs. But now a days the prices of first home (small 2 bedroom flat)has significantly deviated from the fundamentals due to speculation/manipulation by people having spare money by creating artificial demand. This will correct in the coming year.

  2. Dave says

    10 Lac maybe a bit low but I know for a fact that for most middle class buyers, the range would be between 15 to 20 Lacs MAX.

    Why I know this is because I belong to that (middle/upper) middle class and so do the hundred odd of my relatives, friends, neighbors and acquaintances with whom I discuss this so often. Indian’s are fascinated by property, its rising prices and its affordability – its something we constantly discuss.

    The current scenario is a self destructive fraud. It may last for a while but it can’t last forever.

  3. Sumedh says

    I am definitely skeptical of these online surveys…

    Do you really read the questions and think before answering them, whem you come across such a survey?

    10 lacs sounds ridiculously unreasonable…may be 20-25 lacs is a fair price…of course cities have now exceeded that by far…

    – Sumedh
    http://www.zamanzar.com

  4. pradeep says

    yea evn i was concerned abt dis ,ive was jus talkin to some of ma frnds and when i said that the prices are all jus hype noone accepted with ma opinion but theese prices are far from reality for ex :- an agriclutural land 40 kms away from hyderabad (hyd being a small city 40 kms iz too far) costs more then 30 lakhs and the maximum amount you could earn by farming there is 1 lakh per acre per year and having a comercial complex is impractical infact has no use ) see i dont understand whatz the use of buying this land

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