Courtesy of Mish.
On August 1, in India Housing Bubble Still Expanding I posted a series of charts by Deepak Shenoy, an economic blogger at Capital Mind in India.
Those charts showed the bubble in India was alive and growing. Here is one of the charts and a small bit of commentary ….
As of March 2013, Prices have more than doubled since 2009. The All-India Index is at 211, from 100 in March 2009.
The bubble is intact.
But is the bubble bursting? QoQ growth is the second lowest since the data has been recorded – an all India QoQ growth level of 2.1% (versus 6.4% last quarter).
Credit will be constrained from July onwards, so it is quite likely that price growth is hit. Already, rental prices have flattened or reduced, and commercial rents and prices are down (speaking of the June quarter, from anecdotal information). A credit crunch could well cause developer defaults, and then prices will truly fall. For now, the bubble is well and truly visible.
The Bubble Bursts
On Wednesday, the Wall Street Journal reported A Housing Slump in India
The Orbit Grand, a block-size complex designed to have at least 26 floors of elegant apartments, an extensive array of ground-floor stores and abundant parking for the chauffeured cars of residents and shoppers, was supposed to be a diadem of India’s real estate market.
Now it is turning into a symbol of the slumping fortunes of property developers and owners in a once-promising emerging economy. Construction of the Orbit Grand has almost completely stalled at the 10th floor, the tower crane at the site seldom moves and the builder has defaulted on its loan.
“There’s no real work going on right now. There’s just a minimum number of workers coming in to do small things,” said Alam Sheikh, an electrician who is one of just 14 builders left at the site.
The volume of real estate transactions has slumped in India as developers have refused to offer discounts for fear of starting a market rout.
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