Residential Real Estate Unsold Inventory Clearing As Buyers Returning To Market
After reaching an all-time high of 57 months in December 2016 quarter when demonetisation was announced, unsold inventory in the residential real estate has come down to 40 months as buyers are returning to the market to take advantage of stagnant property prices and GST benefits on ready-to-move-in properties.
According to real estate consultancy Liases Foras, housing sales had hit a low of just about 50,700 units across the eight tier-1 cities in the demonetisation quarter but have now jumped to nearly 70,000 units in the three months ending June this fiscal. Months inventory is a measure of how many months it would take for the current inventory of homes in the market to sell.
Demonetisation followed by the new regulatory regime (RERA and GST) and the amendment to the Benami Properties Act impacted not a just real estate but also the Indian economy.
So there was a slowdown in sales. But sales started picking up after a year as it became clear that the new regulatory scenario was actually beneficial to the home buyer, co-founder and Managing Director of Hiranandani Group and President of NAREDCO told.
Liases Foras Managing Director said the decrease in unsold inventory can be partly attributed to price rationalisation.
The prices have been stagnant for three years now and that is pushing sales, he said. The weighted average price per sq ft has been stable at around Rs 6,700 per sq ft since 2016.
During the last fiscal, sales growth was around 13 per cent and this June quarter, there is an increase of 6 per cent. Growth in sales velocity has helped reduce the inventory overhang, he said.
This jump in sales has also been driven by affordable housing, where government incentives under the PM Awas Yojana are attracting buyers to homes under the Rs 25 lakh tag. Between the first quarter of 2016 and 2019, affordable segment almost tripled in sales, he pointed out.
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