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  • April 1, 2021
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Why are homebuyers afraid of the housing boom?

homebuyers afraid of the housing, in my view, the much-discussed housing bubble, which offers a sizable return to homebuyers, is actually terrifying. Yeah, for an ordinary Indian like me, the property is the most significant investment, and we want both the appreciation and the need for a roof over our heads. But the question is, at what expense and for whose value is appreciation given?

homebuyers afraid of the housing boom

It should not be done at the expense of potential home buyers’ buying power in order to help the builders. The trouble with a boom is that it is almost inevitably followed by a crash, and while speculators and developers will be able to time the boom or stop the bust, the ordinary home buyer loses out.

 

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When I look at the market as a whole, I see appreciation past a certain point as the emergence of speculators on the prowl, who can quickly turn boom into bust sooner or later.

As the economy is roaring, the Reserve Bank of India regularly cuts interest rates to entice homebuyers. When the economy is panicked, though, the apex bank lifts interest rates to discourage land bubbles and a possible economic bubble.

For the typical homebuyer, holding the house, let alone selling it, becomes unsustainable. Following the Lehman crisis, a series of distressed transactions in the secondary sector show that realistic markets with modest appreciation are the better property markets. Hot real estate markets, on the other hand, begin to lose steam fast.

We, as house owners, must realize that a home is not a trade asset, and it can not be traded on like a gamble. So, if a marketing agency supporting developers in selling overpriced assets to unsuspecting buyers guarantees double or triple appreciation in the next two or three years, the agent may be suspected.

After all, they’re the property market’s sharks, charging developers big fees in exchange for fast, painless transactions. These businesses are legal because they do not charge customers for their recommendations, but the customer pays their fee anyway because the developer applies it to the sale price. As a result, the customer is duped without any legal basis to sue the broker, and he ends up paying for an overvalued house.

Cold calls, SMS, emails, letterbox drops, billboards, TVCs, newspaper advertising, and other techniques are used by real estate brokers every day. They promise big income and land secrets that will make you a millionaire. They will first check to see if you have the financial means to purchase an investment property, and then they will strike.

I recently answered the phone to a cold caller who said I could attend a free knowledge night, which included fine dining at a five-star hotel, where I could learn how to create wealth through property investing while working on this article.

homebuyers afraid of the housing boom

Later, when I went to one of these investor meet-ups, I was exposed to a lot of high-fiving and hand-clapping, which was supposed to get you emotionally pumped. An option to sign up for an investment on the spot was given to prospective investors. The developer wanted them to commit right away, presumably to prevent customers from going home, sleeping on it, and realizing it was a bad deal.

They were also given a one-stop banking shop with in-house solicitors, accountants, and financial advisors to keep them there. They say it’s for your convenience, but it’s just to prevent them from obtaining unbiased advice from outside experts that would otherwise advise them about the offer.

I’m not sure why I’d like to hear about amazing real estate opportunities from a phone marketer. Thanks to newspapers, blogs, and smartphones, property data is more available than ever before, as well as tips from actual buyers on online forums.

My hunt in the property market as a buyer made me realize one thing loud and clear—Get the basics of due diligence right. Always seek independent advice, engage lawyers, accountants, financial advisers, and reliable brokers. Most importantly, stay away from a property boom that promises unrealistic appreciation.

It can seem that you are squandering an opportunity to capitalize on rising demand. Higher expectations, on the other hand, are more likely to result in higher disappointments. One must decide if it is worthwhile to gamble with one’s most valuable and expensive asset. I’m sure ordinary home buyers won’t appreciate it; however, the difficulty is to avoid being enticed and stuck in the prop trading speculation.

 

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Disclaimer: The views of this expressed above are for informational purposes only based on the industry reports & related news stories. Navimumbaihouses.com does not guarantee the accuracy of this article, completeness, or reliability of the information & shall not be held responsible for any action taken based on the published information.
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