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Unsold Houses In India At All Time High - Liases Foras

Infra News - Published on Fri, 14 Jun 2019

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According to data from real estate consultancy Liases Foras “Over 12.76 lakh houses are lying unsold in India's top 30 cities, compounding the problems of the real estate sector already grappling with a severe liquidity crunch as non-banking finance companies have curtailed lending to developers following the collapse of IL&FS last year. The inventory overhang is as high as 80 months in Kochi, 59 months in Jaipur, 55 months in Lucknow and 72 months in Chennai, implying it will take between five and seven years for developers in these cities to get rid of the present housing stock. The total unsold inventory in 30 cities has increased 8 per cent over FY18 when the number was 11.90 lakh. Of the 12.76 lakh units, the top eight cities, including Mumbai Metropolitan Region, National Capital Region, Bengaluru, Hyderabad, Chennai and Pune alone account for 9.66 lakh houses.”

This does not augur well for the sector, whose primary source of funds have been NBFCs and customer advances. With tepid sales, which grew only 5 per cent last fiscal, builders are unable to get funds for completing under-construction projects, adding to the unsold stock. And NBFCs have almost stopped lending to developers as the liquidity has dried up in the system.

The roots of inventory oversupply lie in the boom of 2011 and 12 when developers went overboard with supply due to high demand from investors. Between 2007 and 2012, builders kept on purchasing more land, often backed by private equity. This led to appreciation in land prices; consequently, the end product became costlier, but people's income didn't rise at the same rate

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Posted By : Rabi Wangkhem on Fri, 14 Jun 2019
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