Zerodha's Nikhil Kamath baffled over Mumbai's super expensive houses

With rising interest rates, problems have only increased for the homebuyers as they are forced to pay more EMIs. Nikhil Kamath, co-founder of Zerodha, has in a series of tweets, tried to wade into the subject, explaining details of India's real estate market.

In a series of tweets, Kamath explained how the Indian housing market looks right now: “Interest rates are going up (a lot, significantly higher EMIs) with an ageing population, fertility rates below replenishment in most states (avg. age will go up with time, older people need lesser space." 

He further added that the residential rental yield is 3 per cent, which is nowhere close to beating inflation.

On black money, Kamath explained, “Whenever the black money problem is resolved in India, this market would be most affected (for obvious reasons). Real Estate as an asset class becomes illiquid quickly, if you and a few around you sell together."

But he didn’t stop there. He then raised questions on property buying in Mumbai by asking, “Why then does a 1000 sqft. apartment still cost so much in Mumbai? And why would you buy, if you can rent at 3 per cent."

This is not the first time Kamath has raised such questions on real estate investment. Earlier in July, he had in a series of tweets discussed whether investing in real estate would yield more than inflation.

Contrary to that, according to the House Purchase Sentiment Index (June 2022), a survey report conducted by Credai MCHI and TruBoard Partners to assess buyer sentiment toward property acquisition showed that at least 47% of prospective homebuyers in Mumbai Metropolitan Region MMR are optimistic about purchasing a home.

To shed some light on the current real estate scenario, a report by Anarock in October stated that housing sales in seven cities increased by 87% between January and September to 2,72,709 units, surpassing the total number of transactions recorded in the entire 2019 pre-COVID year. According to the report, sales totaled 1,45,651 units between January and September of 2021.

Also Read: 'Not a bad thing': Zerodha's Nikhil Kamath shows the bright side of Rupee at 82