Unabashedly Unaffordable Housing Prices: Mumbai
1968: A CA working in Mumbai used to earn about Rs. 750 per month, a house in Chembur cost Rs. 75,000 and the same house was available on rent for Rs. 350 per month.
Work out the Ratios: it was about 8 years Gross Income to buy a house, and the rental yield was 6% p.a.
2017: A CA working in Mumbai can hope to earn Rs. 500,000 per annum. Same house in Chembur costs about Rs. 3 crores and is available on rent for Rs. 70,000 per month.
Work out the Ratios: it is about 60 years gross income to buy a house, and the rental yield is about 2% after paying for the maintenance charges of the society.
Talking about the housing market always evokes a strong, and often emotional, reaction. This is usually because the powerful vested interests (owners, investors, speculators, politicians, lenders, real estate agents and other intermediaries) can’t bear to think of the consequences of a decline in house prices. In the case of politicians, this is ironic because they constantly talk about making housing more “affordable” but, by definition, this means lower prices.
Read on….about the world..
https://seekingalpha.com/article/4062357-unabashedly-unaffordable-global-housing-markets-edge
Abhi
hi subra, since last 7 days your blog is not rendering properly. The first article it shows is “Analysts are salesman too” and nothing after that. This is especially true of accessing from mobile. Please have a look and correct it.
Kalyan
The comparison has to be apples for apples. What was a suburb half a century back (1968) is now a main city. The ideal comparison should be between the prices of Chembur in 1968 and some suburb around Navi Mumbai in 2017. Moreover, the equivalent of a Rs 750 p.m salary in 1968 is roughly Rs 75,000 p.m today. And i guess flats for Rs 75 Lacs are still available in the suburbs, and can be rented for Rs 20-25k per month.
Sushant
Hi Abhi,
I also noticed the same problem. But if you go and type URL as “www.subramoney.com” instead of just “subramoney.com” it works fine and loads all the latest posts. Hope it helps!
Thank you Subra for all the posts. I have been a silent reader for last two three years and improved my financial life credit to you.
Regards,
Sushant
Krish
Affordable housing in Indian parlance means ultra mini size flats, too many flats in limited area, Very far off location, Poor quality often with horrible fixtures and construction, No amenities. In 2 years after full occupation, they look no better than slums.
Abhi
Awesome. Thanks Sushant for the solution.
rajeev
Well, there are alternatives. I live in Pune and had bought a plot 7000 sqft, outside Pune for 12000 Rs in 1981 when no one thought of buying that far away. Now I live in a Bungalow in a reasonably good locality withing corporation limits. I have built the independent home witha garden, at cost, 3500 sqft built up. It did not cost a packet as I built it myself paying for the material and labour.
Owning your own house and living in it has a special pleasure that can not be seen in rented places. I have never stayed in a flat and in a rented place. Have large dog who seems to enjoy the place.
I know Subra is dead against buying houses. But if you want to enjoy your brief time on earth, as well enjoy your life.
I am a long time reader of this blog and must say my thinking has been challenged at times by the thoughts I read here. i am richer due to Subra’s needling. I bought the book and gifted it to my son. Hope he reads it.