Unsold inventory in residential realty reduces to 2-year low in fourth quarter of 2018

On account of headwinds including the liquidity crisis in 2018, housing sales grew by 18 per cent and new launches by 33 per cent across the top 7 cities — Delhi-NCR, Mumbai, Kolkata, Bengaluru, Pune, Chennai and Hyderabad — compared to 2017. Residential inventory overhang reduced to a year-low from 47 months in Q4 2017 to 33 months in Q4 2018 across the top 7 cities. The demonetisation effect in late 2016 had pushed up unsold inventory to 47 months in Q4 2017 from 40 months in Q4 2016. An inventory overhang of 18-24 months signifies a fairly healthy market.

“Having absorbed a lot of the impact of various structural changes, the Indian real estate sector seemed poised to grow from the previous year,” says Anuj Puri, Chairman – ANAROCK Property Consultants, adding, “However, the issue of stalled projects and liquidity crisis continued to confound the housing sector in 2018, though it continued its transition into a relatively more transparent and end-user driven market. End-users accelerated growth while investors shifted focus towards alternative asset classes such as commercial, retail and warehousing, which did fairly well during the year.”

Standing in sync with the views expressed by the ANROCK Chairman; Rakesh Yadav, CMD, Antriksh India told Zee Business online, "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." Yadav of Antriksh India went on to add that NCR still constitutes 52 months’ inventory overhang while Bengaluru and Hyderabad hangs at all-time low of 17 months each.

The top 7 cities recorded new unit launches of around 1,95,300 units in 2018 against 1,46,860 units in 2017. The affordable segment comprised the lion’s share at 40 pere cent. Major cities contributing to 2018 new unit launches included MMR, NCR, Pune, and Bengaluru, together accounting for 74 per cent new supply.