Property prices have reached the sky in the last 2-3 years. The price of 2 BHK or 3 BHK flats in Delhi and Mumbai is above crores. The question is whether it is prudent to buy such expensive flats? A new debate on this issue has started from a LinkedIn Post of Sujit SS, Founder and Sebi-Renistard Advisor of Manidhan.com. Some people have praised his post and some have appeared against it. After all, what has Sujit wrote in this post?
PE ratio shows the valuation of asset
Sujit has compared to buy a flat and buy a stock. He has asked the users that suppose you buy a flat of Rs 4.8 crore, so that you can earn Rs 10 annually as rent. On this basis, its PE ratio comes 48. This means that it will take you 48 years to recover the cost of the flat with rental income. In this calculation, it is believed that the flat fare remains stable.
More valuations are more time to recover cost
He has written that many people will not be ready to pay more than Rs 2 crore for this flat. If the price is considered 2 crores and the rent is not changed, then its PE 20 will come. The PE ratio shows that a property is cheaper or expensive in terms of income income. Sujit compares it by buying a stock that costs Rs 480 and will share Rs 10 per 10 per annum. In this way its PE is 48. If the company’s earnings do not increase soon, then the investor will have to wait a long time to recover the cost of stock.
Flat or stock is the most important valuation
With the help of this example, Sujit has tried to explain that whether you buy a flat or buy stock, his valuation matters a lot. Some users have questioned this example of Sujit. One user has written that you also buy to stay flat and not just for investment. Whatever the truth, it is certain that this post of Sujit means the valuation of an asset the most.