The steaming debate at the moment is whether or not India is engulfed by the dreaded “property bubble”. This term has acquired a chilling reputation after the devastation dealt out by the recent recession – a blow from which the world has yet to recover. A property bubble, simply put, is a phenomenon identified by swift and steep increases in real estate valuations, followed by an abrupt and deep descent. The Great Recession saw the “popping” of property bubbles all over the world.
There are claims that the Indian real estate market has been in the “bubble state” since 2008. But the market has seen an ascending graph for the past 10 years and a bubble is only a temporary disturbance. In fact, supply trails demand by roughly 5 years in the Indian real estate sector. There is a deficit of decent residential space in most major Indian cities, which ensures that there is enough demand for a decade to expect price increases of 10-15% over 5 years.