Thread by @manishanataraj

1/1 This article raises v.imp points. My bit under 3 questions
1) Should home prices in India's cities come down 2) Can they come down 3) Will they come down ? @CREDAINational @NaredcoNational @MoHUA_India @PMOIndia #housingmarket #homeprices loyalie.com/why-i-disagree…

2/1 Let's begin -Should home prices come down? Definitely Rental yields are 1-3% in residential. Decades of cash, graft & dirty money have inflated resi prices beyond economic logic. No reason why resi rental yield is not similar to commercial 7%. BUT

3/1 Can one pandemic fix decades of market inefficiencies ? Is entire onus of price reduction on one lot - Developer? House prices are a function of Land Price + Construction Cost + Finance Cost + Approval (delay) Costs+FSI Premiums + Taxes + Mortgage Rates + Stamp Duty.

4/1 Have banks passed on benefit of 225 basis rate reduction to builders and home loan takers? Have the state governments reduced premiums, taxes levied, stamp duties and circle rates? Is govt not extracting pound of flesh on its land in cities ? Answer is no.

5/1 let's jump to 2nd question - Can house prices come down? Yes despite all of the above they already have, across most markets in varying degree of desperation. In ready flats it's easier to cut. In under-construction older buyers will cry foul! Not easy to announce blanket cut

6/1 Third question - Will home prices come down in a meaningful way to see better rental yields. NO. Unless govt and banks do what they are supposed to. Governments rationalise taxes, stamp duty, circle rate & stop pretending approvals have been stremalined. They haven't.

7/1 Banks - for God sake pass on rate cut benefits! If all of the above happen, yes there can be some meaningful cut in home prices. Especially in the overpriced premium & luxury homes. Till then, ministers can keep flogging a half dead horse. Makes for great headlines.