http://www.business-standard.com/india/storypage.php?autono=335001
Summary: This article tells how buyers in India are reluctant to purchase houses and residents, and that because of this, developers are planning to use discounts to resolve this issue. Due to falling sales of residents over the last few months, developers are forced to offer cash discounts. There were price cuts of 5-15 percent at the start of their buying season in hopes that people would purchase more houses. The main reason why buyers stray away is because in recent years real estate prices have increased by about 400 percent and home loan rates have gone up from 7%-11.5%. In larger towns, sale prices have dropped by about 30%-40%, and in smaller towns about 25%. The government also chipped in by allowing developers to develop twice as much on the same piece of land, but the housing industry is still under attack. If the developer's cash discounts don't lure in enough buyers, then sale rates will continue to plummet even lower.
Connection: The connection I found was in this article, cash discounts were also needed to encourage customers to purchase in their business. In the perspective of the developers in India, they are relying very heavily on cash discounts to lure buyers in and to increase their sales rates. It was also stated that in the article the developers did not want to give cash discounts and reveal that their businesses were under pressure. I think that this could also apply to other businesses. For developers in India, if their cash discount method does not prove to solve their problem, there is a chance that they could get bankrupt.
Reflection: I personally think that their government could do a little more than just giving permission to developers to develop twice as much. I think that they could try decreasing home loan rates. The best thing their government could probably do is to use their tax payers' money more wisely and lower taxes on goods so people could save more money to afford better homes. Advertising could also be of great aid to the developers. Not only locally, but if the developers advertised their residents globally, I'm sure they could lure in a few customers willing to buy housing in India. If I were a developer in India I would suggest that I try advertising to overpopulated countries like China that there are residents in India for cheap.
Thursday, October 30, 2008
Sunday, October 12, 2008
http://www.canada.com/vancouversun/news/business/story.html?id=735123
Summary
The inventories of unsold homes in Canada have risen, this causes more pressure on the house prices. People are trying to unwind the inventory by pushing down the value of mortgage and this by doing this, it's impacting banks and the ability of people to obtain financing. In places like the United States, it's believed that housing will fall below the one millionth mark. One example of this is Detroit, where the imbalance of demand and supply is very noticeable. It's also believed that now the lower the level of housing starts, the better.
Connection
For things like the prices of housing and land, information should be updated regularly, sort of like the perpetual inventory system. Updates every month or so on house prices would allow people to better understand how the economy is doing, just like how a manager of a store can keep an eye on their inventory.
Reflections
If I were a house salesman, or if I would like to sell a house, I would definitely need updated information on how the land and housing values are doing. If I was trying to sell a house and I overpriced it without any knowledge of how the economy was doing, I probably won't get my house sold. I would also have to know if there is any demand for houses because if there was a high demand for housing, I would obviously increase the selling price of my house. So I think that up to date information on how the economy is essential for things like housing.
Summary
The inventories of unsold homes in Canada have risen, this causes more pressure on the house prices. People are trying to unwind the inventory by pushing down the value of mortgage and this by doing this, it's impacting banks and the ability of people to obtain financing. In places like the United States, it's believed that housing will fall below the one millionth mark. One example of this is Detroit, where the imbalance of demand and supply is very noticeable. It's also believed that now the lower the level of housing starts, the better.
Connection
For things like the prices of housing and land, information should be updated regularly, sort of like the perpetual inventory system. Updates every month or so on house prices would allow people to better understand how the economy is doing, just like how a manager of a store can keep an eye on their inventory.
Reflections
If I were a house salesman, or if I would like to sell a house, I would definitely need updated information on how the land and housing values are doing. If I was trying to sell a house and I overpriced it without any knowledge of how the economy was doing, I probably won't get my house sold. I would also have to know if there is any demand for houses because if there was a high demand for housing, I would obviously increase the selling price of my house. So I think that up to date information on how the economy is essential for things like housing.
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