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Unsold residential inventory hits two-year low on ready properties’ sales traction

Infra News - Published on Thu, 17 Jan 2019

Image Source: Moneylife
Economic Times reported that an uptick in the traction of ready-to-move-in and nearing-completion properties has led to residential inventory overhang across India’s top 7 property markets dipping to a 2-year-low. Unsold inventory declined by nearly 7% from a year ago to 6.73 lakh units as on December end from 7.26 lakh units in December 2017 and 14% from 7.90 lakh units in December 2016, showed data from Anarock Property Consultants.

Inventory levels have plummeted to 33 months in at the end of December from 47 months a year ago in Mumbai, Delhi-NCR, Bengaluru, Pune, Hyderabad, Chennai and Kolkata. Months’ inventory measures how many months it will take for the current unsold housing stock to sell based on average monthly sales.

While inventory levels in Bengaluru and Hyderabad property markets fell to an all-time low of 17 months each, Delhi-National Capital Region still constitutes 52 months’ inventory overhang.

The demonetization effect in late 2016 had pushed up unsold inventory to 47 months in December 2017 from 40 months in 2016 December. An inventory level of 18-24 months signifies a fairly healthy market.

The top 7 cities recorded new unit launches of around 195,300 units in 2018 against 146,860 units in 2017. The affordable segment comprised the lion’s share at 40%. Major cities contributing to 2018 new unit launches included Mumbai Metropolitan Region, NCR, Pune and Bengaluru accounting for 74% new supply.

Mr Anuj Puri, Chairman of ANAROCK Property Consultants said that “Having absorbed a lot of the impact of various structural changes, the Indian real estate sector seemed poised to grow from the previous year…End-users accelerated growth while investors shifted focus towards alternate asset classes such as commercial, retail and warehousing, which did fairly well during the year.”

Although the issue of stalled projects and liquidity crisis, according to him, remained a key issue for the housing sector in 2018, it continued the transition into a relatively more transparent and end-user driven market.

Residential sales in 2018 exceeded number of units launched second year in a row. Prior to 2017, sales numbers were far lower than new launch supply. This definitely indicates that the market is managing to shed unsold stock now. Around 248,310 units were sold during the year with NCR, MMR, Bengaluru and Pune together accounting for 82% of the sales.

Mr Puri added that “Builders very extremely cautious about launching projects to align supply with the existing buyer demand. This helped sales pick up momentum in 2018. Simultaneously, builders reduced the average property sizes to align their offerings with the highly-incentivized affordable housing bracket. The affordable segment spearheaded residential growth in 2018.”

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Posted By : Joykumar Irom on Thu, 17 Jan 2019
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