Is there any great logic to real estate prices or is it just the land, builders and the bank mafia that is responsible for keeping the prices high?
Well let us look at the irrationality.
Ahmedabad offers land, people and electricity (the needs for a BPO) at 50% of the prices in Malad or Goregaon. However there are more back offices in Malad and Goregaon than in Ahmedabad.
Bangalore has more high paying jobs than Chennai, but Chennai real estate prices are at least 50% higher than Bengaluru.
Navi Mumbai has power cuts for 4 hours a day (many parts) but the great Maharashtra government will not allow Tata Power to supply or distribute power in Navi Mumbai.
Infrastructure in Mumbai has not kept pace at all- but prices in Ghatkopar, Santacruz, Malabar Hill, — hardly matters which part have gone through the roof. In the UK the cost of a house is about 3.4 times the 'average income' — let us say the 'average income' in Mumbai is Rs. 5 lakhs (not sure if I am right)…so the cost of a house should be Rs. 15 — 20 lakhs! It is about Rs. 1 crore. When will we stop pretending that 'all is well'.
The real estate mafia in Mumbai (including some very respectable names) has kept the prices so high that it is not possible to buy without mortgaging at least 20 years of your life to the loan repayment!! If you see what the supply of office premises has done to Mumbai is that the rental market esp for office space has remained constant or people have got better quality of office for a slightly higher rent. However the rental market for residential houses is not so efficient.
If rents are not going up, but property values are going up, it is a good sign of a bubble. And like in any bubble, do not go short, just stay away!!
House prices fall in London and rest of UK
Monday 18th July 2011, 3:05am
HOUSE prices have dropped for the first time this year, according to a well-regarded Rightmove index released this morning.
Prices fell 1.6 per cent across the UK in July, with even London’s houses experiencing a 1.4 per cent dip, the figures showed.
In June, the average residential property in the capital hit an all time asking price high of £438,622. Yet this month almost £6,000 has been shed from the average asking price, as summer sellers are forced to attract the attention of “holiday-distracted” buyers.
Despite the fall in July, London’s prices remain 5.8 per cent higher for the year so far.
And London’s prices were still 2.5 per cent higher this month than at the same time last year. However across the UK as a whole, prices were up just 0.1 per cent annualised, according to Rightmove’s figures.
The average house throughout the country is priced at £236,597.
Seven out of 10 residential properties put on the market this year remain unsold, Rightmove said, “indicating that many equity poor sellers are unwilling or unable to reduce their prices further.”
While the number of new sellers is down 12 per cent this month compared to one year ago, potentially holding up prices, the drop in prices over the last four years has shattered several housing market myths, Rightmove said.
“Retail price inflation outstripped property prices by 14 per cent over the last four years, improving buyer affordability but undermining perception of bricks and mortar as a hedge against inflation,” the report stated.
While London’s market has significantly outperformed the rest of the country in 2011, today’s report suggests that the price spikes could level out.
“Agents report more offers below the asking price,” said Rightmove’s Miles Shipside, “so this month’s drop is an early warning that prices may be testing their upper limits”.
The survey also suggests that prices should be set at realistic levels when a property is first put on the market, at least for internet listing. The first week attracts nearly twice the number of average hits (100) as the second week (55), Rightmove’s research found.
-Ref
-CITYAM
A video explaining this story is available on the ONS You Tube channel.
In 2009/10, original income, before taxes and benefits, of the top fifth of households in the UK was approximately 16 times greater than that for the bottom fifth (£77,900 per household per year compared with £4,800). After redistribution through taxes and benefits, the ratio between the top and bottom fifths was reduced to four-to-one (average final income of £58,100 compared to £15,100).
Some types of households gain more than others from this redistribution. Retired households pay less in tax than they receive in benefits and so gain overall. Among non-retired households, single adult households with children also gain. Most other non-retired households pay more in tax than they receive in benefits. However, households with children do relatively better than households without children due to the cash benefits and benefits in kind (including health and education services) which are received by these households.
Cash benefits such as Pension Credit, Income Support, Incapacity Benefit, and the State Retirement Pension play the largest part in reducing income inequality. The majority of these go to households in the lower part of the income distribution. Cash benefits make up 59 per cent of gross income for the poorest fifth of households, 43 per cent for the second quintile, falling to 2 per cent for the top fifth of all households.
Direct taxes are progressive when taken as a whole although council tax and Northern Ireland rates are regressive. National Insurance contributions, as a percentage of gross income rose in the bottom four quintiles in 2009/10, from 1.4 per cent in the bottom quintile to 5.4 per cent in the fourth, but fell to 5.2 per cent in the top quintile. Overall in 2009/10, the bottom fifth paid 10 per cent of their gross income in direct tax while the top fifth of households paid 24 per cent.
Indirect taxes are regressive, taking a higher proportion of income from households with smaller incomes. Since direct and indirect taxes have opposite effects on the level of inequality, the tax system as a whole has a negligible effect.
Final income includes an adjustment for the receipt of benefits in kind from the state, such as health and education services. Households with lower incomes tend to receive more benefits in kind from the state (£7,600 for the bottom fifth compared with £5,100 for the top fifth). Retired households are the biggest users of health services provided by the state, while households with children are the biggest users of education services. These two groups are more likely to be in the lower income groups.
Prices fell 1.6 per cent across the UK in July, with even London’s houses experiencing a 1.4 per cent dip, the figures showed.
In June, the average residential property in the capital hit an all time asking price high of £438,622. Yet this month almost £6,000 has been shed from the average asking price, as summer sellers are forced to attract the attention of “holiday-distracted” buyers.
Despite the fall in July, London’s prices remain 5.8 per cent higher for the year so far.
And London’s prices were still 2.5 per cent higher this month than at the same time last year. However across the UK as a whole, prices were up just 0.1 per cent annualised, according to Rightmove’s figures.
The average house throughout the country is priced at £236,597.
Seven out of 10 residential properties put on the market this year remain unsold, Rightmove said, “indicating that many equity poor sellers are unwilling or unable to reduce their prices further.”
While the number of new sellers is down 12 per cent this month compared to one year ago, potentially holding up prices, the drop in prices over the last four years has shattered several housing market myths, Rightmove said.
“Retail price inflation outstripped property prices by 14 per cent over the last four years, improving buyer affordability but undermining perception of bricks and mortar as a hedge against inflation,” the report stated.
While London’s market has significantly outperformed the rest of the country in 2011, today’s report suggests that the price spikes could level out.
“Agents report more offers below the asking price,” said Rightmove’s Miles Shipside, “so this month’s drop is an early warning that prices may be testing their upper limits”.
The survey also suggests that prices should be set at realistic levels when a property is first put on the market, at least for internet listing. The first week attracts nearly twice the number of average hits (100) as the second week (55), Rightmove’s research found.
-Ref
-CITYAM
UK Household Income Top to bottom income four-to-one |
 Original income and final income by income quintile group, 2009/10, UK |
A video explaining this story is available on the ONS You Tube channel.
In 2009/10, original income, before taxes and benefits, of the top fifth of households in the UK was approximately 16 times greater than that for the bottom fifth (£77,900 per household per year compared with £4,800). After redistribution through taxes and benefits, the ratio between the top and bottom fifths was reduced to four-to-one (average final income of £58,100 compared to £15,100).
Some types of households gain more than others from this redistribution. Retired households pay less in tax than they receive in benefits and so gain overall. Among non-retired households, single adult households with children also gain. Most other non-retired households pay more in tax than they receive in benefits. However, households with children do relatively better than households without children due to the cash benefits and benefits in kind (including health and education services) which are received by these households.
Cash benefits such as Pension Credit, Income Support, Incapacity Benefit, and the State Retirement Pension play the largest part in reducing income inequality. The majority of these go to households in the lower part of the income distribution. Cash benefits make up 59 per cent of gross income for the poorest fifth of households, 43 per cent for the second quintile, falling to 2 per cent for the top fifth of all households.
Direct taxes are progressive when taken as a whole although council tax and Northern Ireland rates are regressive. National Insurance contributions, as a percentage of gross income rose in the bottom four quintiles in 2009/10, from 1.4 per cent in the bottom quintile to 5.4 per cent in the fourth, but fell to 5.2 per cent in the top quintile. Overall in 2009/10, the bottom fifth paid 10 per cent of their gross income in direct tax while the top fifth of households paid 24 per cent.
Indirect taxes are regressive, taking a higher proportion of income from households with smaller incomes. Since direct and indirect taxes have opposite effects on the level of inequality, the tax system as a whole has a negligible effect.
Final income includes an adjustment for the receipt of benefits in kind from the state, such as health and education services. Households with lower incomes tend to receive more benefits in kind from the state (£7,600 for the bottom fifth compared with £5,100 for the top fifth). Retired households are the biggest users of health services provided by the state, while households with children are the biggest users of education services. These two groups are more likely to be in the lower income groups.
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