India — a growing market becoming more attractive
Within forty years India will be the most populous nation in the world. This young and increasingly wealthy nation has some huge challenges ahead. India's middle class alone will be 983 million-strong by 2015 and half of the population is under the age of 25 and as a result the property sector will have to grow too.
India's net income has doubled in the last ten years. Consider where some of the money is going:
- India is the second-largest mobile-phone market
- India is the second-largest scooter and motorbike market
- It is home to an increasingly sophisticated housing market
The years of unclear titles, poor building standards and labyrinthian tenancy laws are coming to an end. Most estate agents will ensure that the title on a property is clear before the purchase goes ahead. In another step forward for investor confidence the government is considering computerisation of land records and foreign direct investment is now allowed in real estate. This confidence is reflected in the institutions that have filed for permission to introduce $1billion-worth of real-estate mutual funds in India.
But is all this leading to a real estate bubble and bust, or a robust long term market? We could do worse than to compare India with the US for some clues.
- In India, the ratio of the total value of mortgages to GDP is only 2%, compared to 52% in the United States. That means in the US, for every $100 they produce, they owe $52 as mortgage. Indians, however, owe just $2.
- Over the last 10 years, real-estate prices in India have barely budged, with the exception of those in a few large cities, such as Bombay and Bangalore. But median real-estate prices in the US have risen nearly 15% in the last 12 months alone.
- Interest rates are a healthy 4.3%, 18% lower than they were in 2001. However, overall it seems that growth in the housing sector has been income driven (net income has increased nearly 100% over the last 10 years), not interest-rate driven.
And it isn't just residential property that looks interesting. Driven by the IT and outsourcing booms, more foreign companies are relocating their operations to India pushing up the price of commercial premises. To sum up, India looks a good bet in a number of sectors.
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Your home may be repossessed if you do not keep up repayments on your mortgage.
The overall cost for comparison is 7.1% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration. There may be a fee for the mortgage advice. The precise amount will depend on your circumstances, but we estimate it will be 1.5% of the loan amount with a minimum fee of £500 added on to the loan.
Mayfair Consulting Limited is an Appointed Representative of The Mortgage Times Group Limited, 279 Tottenham Court Road, London , W1T 7RJ , which is authorised and regulated by the Financial Services Authority no. 303007.
