Posted by: pire April 5, 2011
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Sorry to pierce the bubble here. The faux logic presented above is what we call "speculation".
1. You assume inflation will rise. What if we run into a situation where inflation is flat? Like in the states? In fact, in the time of global depression, inflation is more likely to be near 0. What if we get a good govt which emphasizes on food and energy security?
2. For the next two years, even the rosiest forecasters in housing market would tell you the price would continue to go down, and people who took loan from the bank to bankroll their speculation are being squeezed badly. So, if I have 4 karod, I will get extra 1 karod in next two years, and with 5 karod, I will have a better bargaining ability than letting all my money be anchored in a old house (which by your own admission can be expanded etc etc). Having 5 karod at hand is a big deal even in inflation time. You can buy a mansion in upstate New York for god's sake.
3. Actually, my friends in stock market (NEPSE) tell me that NEPSE is so low rightnow that there is no way purchasing a share there can result in loss. So, they think if I have money, I should put money there. Govt is keen to give impetus to share market, so why not double my money in two years by putting there?
4. There are many people who are keen to cash in on today's unbalanced market. A retiring bureaucrat with a house in Dhumbarahi (1 ropani) told me that he would happily sell his house for 1.5 karod, put that money in bank, and rent a house somewhere else. A house like his can be rented for 25K per month. In fact, so many parents in KTM have sent their kids to foreign countries that there may be more empty houses in Nepal than we think. People are willing to cut their rent for good , educated families to rent.
So, here is my deal. The first house rented: 40 lakh. (5 lakh per ana, 20 lakh for the house). For the second house, if it has some commercial value, then it may get 1 karod or so. Anyone who pays more is a moron.:)
1. You assume inflation will rise. What if we run into a situation where inflation is flat? Like in the states? In fact, in the time of global depression, inflation is more likely to be near 0. What if we get a good govt which emphasizes on food and energy security?
2. For the next two years, even the rosiest forecasters in housing market would tell you the price would continue to go down, and people who took loan from the bank to bankroll their speculation are being squeezed badly. So, if I have 4 karod, I will get extra 1 karod in next two years, and with 5 karod, I will have a better bargaining ability than letting all my money be anchored in a old house (which by your own admission can be expanded etc etc). Having 5 karod at hand is a big deal even in inflation time. You can buy a mansion in upstate New York for god's sake.
3. Actually, my friends in stock market (NEPSE) tell me that NEPSE is so low rightnow that there is no way purchasing a share there can result in loss. So, they think if I have money, I should put money there. Govt is keen to give impetus to share market, so why not double my money in two years by putting there?
4. There are many people who are keen to cash in on today's unbalanced market. A retiring bureaucrat with a house in Dhumbarahi (1 ropani) told me that he would happily sell his house for 1.5 karod, put that money in bank, and rent a house somewhere else. A house like his can be rented for 25K per month. In fact, so many parents in KTM have sent their kids to foreign countries that there may be more empty houses in Nepal than we think. People are willing to cut their rent for good , educated families to rent.
So, here is my deal. The first house rented: 40 lakh. (5 lakh per ana, 20 lakh for the house). For the second house, if it has some commercial value, then it may get 1 karod or so. Anyone who pays more is a moron.:)