Indian homebuyers are gradually returning to the market and taking advantage of favourable property prices and cuts in GST and home loan rates earlier this year. ANAROCK’s most recent data reveals that residential inventory in the top 7 cities overhang plunged to 30 months’ worth in Q1 2019 against 50 months in the corresponding period in 2017.
Inventory measured in months indicates how many months it will take for the current unsold housing stock on the market to sell. At any given period, an inventory overhang of 18-24 months is considered fairly healthy.
Source: ANAROCK Research
Housing sales recorded in Q1 2017 were merely 46,000 units across the top 7 cities. Sales rose by a whopping 71% in two years to reach nearly 78,520 units in Q1 2019.
Anuj Puri, Chairman – ANAROCK Property Consultants says, “Average property prices across cities have largely maintained status quo and saw less than 2% rise in the last two years – from INR 5,480 per sq. ft. in Q1 2017 to INR 5,570 per sq. ft. in Q1 2019. While the top 7 cities saw a cumulative drop of 16% in overall unsold housing stock in the last two years, Bangalore saw the maximum decline. The city saw pent-up housing inventory reduce by a 44% – from nearly 1,18700 units in Q1 2017 to 66,820 units in Q1 2019. Hyderabad followed with a 21% decline in the same period.”
Delhi-NCR saw unsold stock decrease by a significant 18% during this period, leaving the other ‘heavyweight’ market MMR far behind. MMR cleared a mere 4% of its unsold inventory in the same period. In short, NCR has halved its unsold housing inventory overhang – from 90 months in Q1 2017 to 45 months in Q1 2019.
The current housing inventory level now stands at 6.65 lakh units across the top 7 cities – nowhere near the lowest level of 4.96 lakh units seen in 2013. However, the extremely worrisome trend of rising inventory since 2014 onwards has effectively been arrested, with data clearly suggesting a q-o-q unsold stock decline in the 7 main cities from Q1 2017 onward. In the coming quarters, a stable government at the Centre will boost buyer confidence further and increase housing sales velocity.
ANAROCK’s recent Consumer Sentiment Survey also confirms that over 60% of prospective buyers plan to take the property plunge in 2019. Apart from favourable property prices, GST rate cuts and multiple sops for first-time and budget home buyers played key roles in this improvement.