Posted by: SAP Dude December 31, 2012
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1)$300/monthly salary to sustain a crore real estate price?
---- $300 monthly salary folks are not the ones who make Aana worth crores. Its the people with crores who are buying in crores. There is only sufficient land for Crore and higher players. Not enough space for little fishes to enter the KTM land game.
2)If people are borrowing to buy property as investment, then rental income will hardly meet the mortgage. Unless everyone has extra cash lying around, this will lead to a systemic banking failure.
------- Go back to answer number 1, there is not enough land in KTM for the borrowers, the land is barely enough for "Cash Only" investors. The market went up 1000% in 10 years and corrected down 30% until recently. Still lots of cash to go around.
3)How about all the investments that have already been made?. Unless everyone bought in cash, otherwise crores of loan repayment defaults will not be healthy for economy.
-------------It has not been healthy for the economy and we are already seeing the slowness in effect.
4)Nepal cannot rely on remittance alone to prop up real estate prices.
-------------Nepal cannot rely on remittance alone for just about anything. The remittance folks do not have enough to buy land in KTM. May be 100 heads remittance money trickles up to 4 Aana land in KTM. But there are almost 3 million remittance heads outside.
5)The fact that real estate prices have dropped itself proves that real estate is in trouble. Kathmandu may be small but if there is an economic collapse then size will not matter. Also be aware that Nepal is in process of decentralising. there will always be other options in near future. If you get in and out in a boom then it is good, but thinking that 1 crore invested in kathmandu will become 10 crores a decade later is a fallacy.
------------KTM land is not even enough for KATM folks....KTM does not need outsiders to prop up their real estate market. In the other hand, i can see KTM folks being pushed to the hills nearby due to land shortage inside KTM.
Finally you have made one belieavle point. People should not anticipate 1:10 boom for quite some time in real estate.
6)If prices are falling, why should people buy?. Should it not be wait and see?. Unless you are really desperate, it is better to wait couple of years.
--------- Prices are falling, and people are not buying, they are waiting and seeing unless desperate. That is what we have been seeing for last couple years....its may stay like that for another two years but THERE WILL NOT BE A CRASH.
Not sure why you are so desperate to prove that the market will crash. It is quite normall for the market to correct and slow down after a decade long spike like we saw last time. May be the 10 folds returns in real estate is gone but no way we will see the crash in KTM. Everyone dreams to own some land in KTM and there is just not enough for everyone. Even if the real estate market goes down in the whole country, KTM will be least affected.
---- $300 monthly salary folks are not the ones who make Aana worth crores. Its the people with crores who are buying in crores. There is only sufficient land for Crore and higher players. Not enough space for little fishes to enter the KTM land game.
2)If people are borrowing to buy property as investment, then rental income will hardly meet the mortgage. Unless everyone has extra cash lying around, this will lead to a systemic banking failure.
------- Go back to answer number 1, there is not enough land in KTM for the borrowers, the land is barely enough for "Cash Only" investors. The market went up 1000% in 10 years and corrected down 30% until recently. Still lots of cash to go around.
3)How about all the investments that have already been made?. Unless everyone bought in cash, otherwise crores of loan repayment defaults will not be healthy for economy.
-------------It has not been healthy for the economy and we are already seeing the slowness in effect.
4)Nepal cannot rely on remittance alone to prop up real estate prices.
-------------Nepal cannot rely on remittance alone for just about anything. The remittance folks do not have enough to buy land in KTM. May be 100 heads remittance money trickles up to 4 Aana land in KTM. But there are almost 3 million remittance heads outside.
5)The fact that real estate prices have dropped itself proves that real estate is in trouble. Kathmandu may be small but if there is an economic collapse then size will not matter. Also be aware that Nepal is in process of decentralising. there will always be other options in near future. If you get in and out in a boom then it is good, but thinking that 1 crore invested in kathmandu will become 10 crores a decade later is a fallacy.
------------KTM land is not even enough for KATM folks....KTM does not need outsiders to prop up their real estate market. In the other hand, i can see KTM folks being pushed to the hills nearby due to land shortage inside KTM.
Finally you have made one belieavle point. People should not anticipate 1:10 boom for quite some time in real estate.
6)If prices are falling, why should people buy?. Should it not be wait and see?. Unless you are really desperate, it is better to wait couple of years.
--------- Prices are falling, and people are not buying, they are waiting and seeing unless desperate. That is what we have been seeing for last couple years....its may stay like that for another two years but THERE WILL NOT BE A CRASH.
Not sure why you are so desperate to prove that the market will crash. It is quite normall for the market to correct and slow down after a decade long spike like we saw last time. May be the 10 folds returns in real estate is gone but no way we will see the crash in KTM. Everyone dreams to own some land in KTM and there is just not enough for everyone. Even if the real estate market goes down in the whole country, KTM will be least affected.