The Housing Price Conundrum

We are seeing that housing prices are increasing with fast rates. When we compare real estate industry with any other industry, we find very high growth in this industry due to rising of the housing prices. This is a very complex conundrum. Today, we are trying to understand this housing price conundrum.

In India, if we trust on first housing index of National housing Bank, we see that the housing prices have become doubled with in 4 years ( from 2007 to 2011).

Some cities of India like Chennai have crossed 100% increase. 

There are lots of factors of increasing the prices of houses. 

1. Increasing of Population 

Increasing of population is direct new demand of houses. More India's population will increase, we need more houses to live. But total land of India is not unlimited. So, all those who want to sell will their own price. They always want to get more value of their house if they will sell. This trend increases the housing prices. 

2.  Per Capita Income 

Per Capita incomes means earning of every single person of India. Very few Indians income is in millions and very large Indian's income is very low. Due to this, our per capita incomes shows opposite result. In reality, per capita income is increasing very low rate. But they need also houses to live. So, capitalist's best way to exploit poor Indians is to increase the housing prices.

3. Increasing of Supply 

If a capitalist of India has money (black), what will he do? He will buy land or property at any cost and then sell it at higher price. Even after the incomes are low. Due to this, they demand less. But supply of new houses are increasing very fast rate. At that time, houses are sold. Will it decrease the housing prices. No, it will not decreases the housing prices but it will increase the housing price because they have to get minimum return on the investment of production of new houses. Suppose, one capitalist invests Rs. 200,00,000 in housing. But no body is buying same houses after construction at Rs. 300,00,000. Suppose, he could not sell a single in two years. Now, you can tell me who will give interest on Rs. 200,00,000. Answer is no body. So, he will do his business with patience and will increase the prices of his housing. He may sell his houses on financing basis or any other way but he will not decrease the prices of his housing building. This is nature of human being because housing building can be used by 100 ways. He can give it on rent. He can make his warehouse in it. He can use it for his any other business. 

5. Mortgage on House 

You know that house rent is always more than interest of mortgage on house. So, this is helpful to increase the houses prices. If a person who has made house but due to not sale of this house. He can suffer money problem. For recovering his money problem, he can get mortgage on house. For this, he has to give interest which he can easily cover by getting rent before selling the same house. This factor encourages property deal to increase the prices of houses. If he need more money, he can get housing equity loans instead of selling his house at low price. 

6. Rent Rates 

One of important content of Wikipedia "Real estate bubble" states that there is big effect of increase of rent rates on the increasing of the prices of house properties. For this, we have to learn house price - earning ratio.

\mbox{House P/E ratio} = \frac{\mbox{House price}}{\mbox{Rent} - \mbox{Expenses}}

We also study Gross Rental Yield 

\mbox{Gross Rental Yield} = \frac{\mbox{Monthly Rent x 12}}{\mbox{House Price}} \mbox{ x } 100%

If rent rates are increasing, it is the chance there will be more investment in this sector for getting high return. This will create a trend and prices will increase like bubble.







access account accountant Accounting accounting definitions accounting ebook Accounting education accounting procedure accounting process outsourcing Accounting Software advance advertising africa Amalgamation amendments announcements Annuity assets audit auditing Australia B.Com. balance sheet bank Bank reconciliation banking basic accounting BBA benefits best bill black money blog bloggers book keeping bookkeeping Branch Accounting - full tutorial budget Budget variance business businessman CA calculator canada capital capital budgeting career cash cash book cash flow statement Chiense children china class coaching coins college commerce commerce students company computer computer accounting conference Contact vinod kumar Control Your Spending corporate accounting cost cost accounting cost center cost centre CPA credit credit card cs currency data Debit and credit debit cards debt debtor degree depletion depreciation Diwali Messages documents dollar domain Downloads Dubai e-accounting earning education Education Loans email employee EPF ERP euromoney examination excel excise duty expenses facebook factor of loan fans feature fifo FII fiji finacle finance Financial financial accounting fire insurance flickr flow forensic forex formula france fraud free fun function fund GAAP GDP gdr germany gold goodwill goodwill accounting google google apps Google Adsense google apps google base google buzz google calendar Google docs google finance google fusion tables google talk govt. GST guide health Hindi Hindi Language history holding company How to treat FBT in Tally 9 HRA ICAI ICAWI ICICI Bank IFRS income income statement Income Tax India indian railway Indonesia inflation inflation accounting infographics information inspiration insurance insurance accounting Intangible interest international Internet Introduction of Tally 9 inventory investment investment in Shares invoice IT Japan Job costing journal entries Journal Entries eBook Help Kalculate keyboard kindle kuwait laptop law LBT learning lease lecture ledger leducation Leverage Analysis liabilities lifo linkedin loan logical point loss loss of profit M.Com. m.phil malaysia management accounting manual accounting manufacturing account market marketing mastercard material MBA MCA media migration mobile money ms word ms. excel multi currency in tally 9 Multicurrency Accounting mutual fund national security new and sacrifice ratio new york times new zealand news NGO nonprofit-accounting North Georgia Mountains NPV NSE odbc office oman online application online accounting Online Accounting Course otcei pakistan parents Partnership pay pal pdf Personal Finance pie chart pie chart of income pnb podcast ppf presentation price privacy policy prize money prof. vinod kumar profit profit and loss account project management provision purchase puzzles quickbooks Quote quotes quotes of svtuition rating agency ratio analysis RBI readers real estate rectification of errors remote control reports reserves responsibility accounting retirement revenue Revenue reserves review risk rupees salary sale saudi arabia saving sbi scholarship school SEBI security service tax share share trading Shares shri lanka singapore sms social accounting society solution South Africa stock stock exchange structure student students study subsidiary company svtuition swiss bank tally tally 9 Tally 7.2 Tally 9 Tally.ERP 9 tanzania tax Tax Accounting TDS teacher teaching technology test testimonial testimonials thailand tips trading trading on equity transaction trend trial balance truthfulness tuition twitter UAE UGC - NET Commerce UK United Arab Emirates university usa valuation VAT Video Voucher and vouching Wealth wikipedia working capital youtube
Accounting Education: The Housing Price Conundrum
The Housing Price Conundrum
Accounting Education
Not found any lecture VIEW ALL Continue reading Reply Cancel reply Delete By Home PAGES Lectures View All RECOMMENDED FOR YOU Category ARCHIVE SEARCH ALL Lectures Not found any lecture match with your request, please help to write it and send it to our email at for making this website free accounting and finance encyclopedia. Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock