A recent article which describes “the opportunity for lucrative investment” of Indian real estate as a substantial mechanism for the transfer of wealth which largely exploits the ambitions of the middle class has sparked a long discussion on Reddit.
According to the user, the system attracts politicians, bureaucrats and businessmen who initially buy properties with minimal costs. Over time, these assets see their prices inflated artificially through speculative activities and government policies. Finally, these properties are sold to the upper middle class, which finance the purchase by considerable loans, extending over 20 to 30 years.
“Wealth goes from working class to the elite, while banks collect interest for decades”, the Redderor summed up its observations.
The cycle leads to significant profits for initial investors, while new buyers remain to manage substantial debts, indicates the position. All this happens even if many in the salaried class believe that they “invest” in a precious asset. However, they are essentially committed to a system where a richer person has already collected significant gains.
“The middle class grants loans over 30 years, thinking that they get an appreciating asset, but end up paying 2-3X the cost of interest,” said the message, adding that if the cycle slows down, future generations can realize that they have inherited a problematic financial burden.
The Reddit Post also explains how the process is exacerbated by inflated wages in the IT sector of India. “The real estate market depends on these inflated computer wages to maintain itself-because who else will take a loan of 3-5 ₹ for a 2BHK?” User’s questions.
IT wages feed the market because they allow individuals to contract high loans for properties, maintaining the momentum of the cycle.
The Redditor continues by explaining that the sustainability of this system is precariously balanced on the continuous growth of computer wages, which have already reached substantial levels. Indian IT professionals earn wages that reflect or exceed those of their American counterparts, despite the operation on a clearly different market. If these wages stagnate or correct, the buyer pool for expensive properties may decrease, risking the collapse of this real estate system, warns the user.
Consequently, the illusion of real estate as a secure investment could collapse, highlighting the transfer of significant wealth which occurred from the working class to the elite. “Real estate in India is not only an investment – it is a wealth transfer system where the rich prints, the middle class finances their release, and computer wages are the only reason why this illusion has not yet collapsed,” concludes the user.
However, some Redditors disagree with the position. “Prices swell because the currency is devalued by the impression of money. Apartments are a better reserve of value than money itself.
Another Redditor responded to the post saying that “the concept of wealth is himself false when anyone in the middle class decides to invest in real estate”. “We, all the people who plan to invest in real estate, are only for residential purposes, wealth is something that you can generate from this asset.”
