Traditionally, most pay commission award have coincided with upmove in real estate prices and in inflation.
2008-9 (when 6th pay commission arrears were paid) coincided with both the lows of the 2008 crash and the take off for a major bull run till 2013 in both Gurgaon and NOIDA which we have been tracking so closely on IREF
The 1998 5th pay commission award was accompanied by a major slump in real estate prices from 1995 to 2003. This may be seen as a big exception to the rule - however, this award was responsible for a major round of flat buying in both Dwarka and Gurgaon. Although prices stayed low in a few years after the award, it laid the foundation for the bull run which started in 2003 or so and went till 2007. It was possible for the govt servants to buy flats in GGN and Dwarka for 16-25 Lakhs from 1998 to 2002 period, which have now ballooned to 1 Crore prices.
The 1987 Fourth Pay Commission definitely coincided with a major upmove in Delhi property prices, from about 4 lakhs to about 8 lakhs for DDA flats which showed good price appreciation. The sudden upmove of 1993-1996 in a bull run again had its foundation in the Vasant Kunj flats bought by govt. servants.
The third pay commission of 1973 is basically irrelevant being too remote.
Now that govt has announced 7th pay commission, its report is likely to 2016 and arrears are likely by 2017-18. It is slightly early in announcement, but the change of govt in 2014 is likely to delay it nullifying early announcement.
The question is this:
What will be the market price behaviour of flats depending on this award - when will the bullish effects start and when will it be maximum?
When should one buy real estate to maximise low entry price and maximum benefit of the bullish upmoves both immediate and prolonged?
My guess would be:
Flat market till 2016. Award announced. Prices low, so 2016 should be a good time to book. However market conditions in 2016 remain to be seen. Likely poor economic performance.
By 2017-8 the arrears will be paid. Immediate effects are likely to be present by 2018-2019. Effect is likely to persist till 2023-4 with both immediate sustained prolonged effects and a bull run starting 2022 or so - which might be best time to sell.
2008-9 (when 6th pay commission arrears were paid) coincided with both the lows of the 2008 crash and the take off for a major bull run till 2013 in both Gurgaon and NOIDA which we have been tracking so closely on IREF
The 1998 5th pay commission award was accompanied by a major slump in real estate prices from 1995 to 2003. This may be seen as a big exception to the rule - however, this award was responsible for a major round of flat buying in both Dwarka and Gurgaon. Although prices stayed low in a few years after the award, it laid the foundation for the bull run which started in 2003 or so and went till 2007. It was possible for the govt servants to buy flats in GGN and Dwarka for 16-25 Lakhs from 1998 to 2002 period, which have now ballooned to 1 Crore prices.
The 1987 Fourth Pay Commission definitely coincided with a major upmove in Delhi property prices, from about 4 lakhs to about 8 lakhs for DDA flats which showed good price appreciation. The sudden upmove of 1993-1996 in a bull run again had its foundation in the Vasant Kunj flats bought by govt. servants.
The third pay commission of 1973 is basically irrelevant being too remote.
Now that govt has announced 7th pay commission, its report is likely to 2016 and arrears are likely by 2017-18. It is slightly early in announcement, but the change of govt in 2014 is likely to delay it nullifying early announcement.
The question is this:
What will be the market price behaviour of flats depending on this award - when will the bullish effects start and when will it be maximum?
When should one buy real estate to maximise low entry price and maximum benefit of the bullish upmoves both immediate and prolonged?
My guess would be:
Flat market till 2016. Award announced. Prices low, so 2016 should be a good time to book. However market conditions in 2016 remain to be seen. Likely poor economic performance.
By 2017-8 the arrears will be paid. Immediate effects are likely to be present by 2018-2019. Effect is likely to persist till 2023-4 with both immediate sustained prolonged effects and a bull run starting 2022 or so - which might be best time to sell.