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A Key Concern Lingers For Booming Real Estate Market

Record housing sales in 2022-23 fiscal in India's booming property market masks a key challenge—that of unsold inventory.

<div class="paragraphs"><p>Representational image. (Source: Pexels)</p></div>
Representational image. (Source: Pexels)

Record housing sales in 2022-23 fiscal in India's booming property market masks a key challenge—that of unsold inventory.

The number of homes yet to find buyers in the nation's top seven cities remained almost unchanged over the previous year in FY23. That's when sales jumped 36% to about 3.79 lakh units, according to Anarock Property Consultant Pvt.

Demand is driven by new projects. According to Anarock research data, of the 1.14 lakh units sold in January-March 2023, over 41% were in the newly launched apartment complexes.

The top seven cities include Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai Metropolitan Region, National Capital Region and Pune.

The National Capital Region saw the biggest drop of 22% in inventory in April-June 2022. Chennai, Kolkata and Bengaluru saw a drop of 11%, 8% and 4% respectively.

However, unsold inventory rose in other cities, such as Hyderabad by 17% and Pune by 6% year-on-year. In MMR, the level of homes unsold increased by 13% even as the region led with the largest share in both sales value and in the last fiscal.

While unsold inventory level is an important parameter, Yashwin Bangera, senior vice president at Knight Frank India, said it should be looked at along with current sales.

"The number of quarters required to exhaust the unsold inventory in the market has reduced quite dramatically over the past two years, implying that sales momentum continues to remain healthy and the unsold inventory is not a significant cause for concern at this point," said Bangera said.

Outlook

With demand outstripping supply over the past year, inventory dipped 4% year-on-year in India in April. Time taken to exhaust unsold homes improved to 18 months in April versus 24 months a year earlier, analysts at Nuvama said in a recent note.

The NCR market has shown improvement, with inventory steadily falling from 38 months in April 2022 to 27 months in April 2023, it said.

"We believe absorption would continue to be healthy, aided by the high levels of affordability despite the recent increase in mortgage rates/housing prices," Nuvama said. "However, launches shall remain contained due to liquidity constraints."