Dreaming about a house? Forget it for the time being..

Where the property prices are headed? Sub-prime is a big worry in US now and the way Indian Real Estate sector is heating up, I see lot of people postponing their plans of buying a dream house. Who knows may be 5-6 years from now, you get them cheap but on the other hand who knows whether after 5 years you will be able to afford a 700 sq ft 1 bhk flat even in the suburbs?

Rajpura is a small sleepy town in Punjab about 30 kms from Ambala and 50 kms from Chandigarh. It was a quiet little town till 7-8 years back and then the real estate boom happened. My engineering college was around 150 kms from Ambala which was the closest railway station as not all trains stop at Rajpura. So to reach Patiala you have to get down at Ambala and take a bus from there. The highway is really nice and on the sides you can see the greenery that Punjab and Haryana are famous for. Along the wide spreads of greenery you can spot some Gurudwaras with a hint of gold on them (I think there are a couple of those on the way). The deductive logic tells you that the land is fertile and people are rich. Silently they also tell you the story of the thriving NRI community. If the gold on the dome of the gurudwaras are not enough, then the numerous Western Union Money Transfer outlets will complete the logic.

The land is fertile, people are rich and every other family has a NRI settled abroad sending dollars back home. What does all this mean? The answer or rather the question came to me in the form of advertisement of Parsvnath builders. I keep hearing about this company and have seen their hoardings all over the Delhi - Ambala highway a couple of years back. With utmost curiousity a visit to their website tells the other end of the story about the skyrocketing property prices. The city is just like another small town with not very sophisticated infrastructure. Some of the Express trains does not stop at the station and many buses from Ambala take the bypass route to Ludhiana or Chandigarh. The only distinction is that the city is very close to NH 1 which for most of the stretch running around Rajpura is a six lane super highway. But wait, the road which connects the city with this highway is a 2 lane, poorly maintained one.

Can you believe that a 4000 sq feet house can cost you 62 lakhs... Yes, 62 lakhs in Rajpura. The price tag may look a tad costly but the same size flat in Mohali or Chandigarh will require you to shell some 5-6 times more than that (3-4 Crores). Looks like a good bargain right? Let's try to draw some more comparisons. After recent crash in the housing prices in US, with this amount of money (4 Crores) you can buy a house built on half an acre of land with a beautiful kitchen garden and you will still be left with enough money to spend on beautification. The quality of life will ofcourse be better than any other city in our country. In fact in some of our metros, it's worse than a class II or class III town. The roads are congested, the streets are littered and there are all sorts of dangers lurking by. And the price that you are paying for is a house located around 20 kms from the closest suburb of Chandiagrh (which itself was a sleepy town some 10 years ago). Factor the rising petrol prices and you'll see that it's all a lot overpriced. (Of-course you won't if you have that much locked in some account waiting to be spent and you fall for the advertisement which promises you so many things)

Our economy is on a boom and people can afford to pay that much but what will happen if it slows down. I keep hearing that "consumption will drive our economy" but for how long? In simplistic sense to buy these kind of house, people have to borrow money. If the people are on the producer side, they will raise the prices of their produce, if they are on the consumer side they will reduce their consumption of other things. In both cases the consumption will drop. Everything boils down to demand and supply and as long as people keep snapping up these shiny villas even for sky high prices, builders will keep churning out projects like these. Bloggers like us can cry but nothing will happen and the question will remain a question that when will I be able to buy a thing like that with my own money?

These are surely changing times (Not only for Rajpura of-course) .