Unsold housing inventories fell 9 per cent across eight cities in 2020 at 7.18 lakh units on sharp decline in new launches, but builders will now take nearly four years to clear these stocks at current low sales velocity, according to PropTiger.
The housing brokerage firm, which is a part of News Corp and REA backed Elara Technologies, on Monday released its report 'Real Insight Q4 2020', a quarterly analysis of India's eight prime residential markets.
"Unsold housing inventory in the eight cities was at over 7.18 lakh units as of December 31, 2020, as compared with the unsold inventory of nearly 7.92 lakh units in December 2019.
However, because of a lower sales velocity in 2020 as compared to 2019, the average inventory overhang has increased to 47 months as of December 2020, as compared to 27 months in December 2019," the report said.
Inventory overhang is defined as the time that builders would take to sell off their existing stock at the current sales velocity.
At 48 per cent, the affordable segment contributes the highest share to the national unsold stock while nearly 19 per cent of the total unsold inventory falls in the ready-to-move-in category.
Mumbai and Pune continue to hold the highest share in the unsold stock with developers. However, at 72 months, the inventory overhang is the highest in the Delhi-NCR, while Hyderabad is the lowest at 29 months.
According to the data, the Mumbai Metropolitan Region (MMR) has the highest unsold inventories at 2,67,987 units, followed by Pune 1,21,868 units, NCR 1,06,689 units, Bengaluru 71,198 units, Hyderabad 39,308 units, Ahmedabad 38,614 units, Chennai 36,609 units and Kolkata 30,210 units.
PropTiger reported a 47 per cent decline in housing sales to 3,47,586 units in 2020 from 1,82,639 units during the previous year, while the new supply plunged 50 per cent to 1,22,426 units from 2,44,256 units.
However, sales rose 68 per cent to 58,914 units in the October-December period of the 2020 calendar year compared with the previous quarter, on pent up as well as festive demand.
"All factors considered, the sector has shown remarkable tenacity in 2020 against unprecedented odds that have caused the economy to contract and impacted consumer spending. The fact that housing sales in India's key markets have started to bounce back, despite the general gloom caused by the pandemic, shows the immense potential of the real estate sector," said Dhruv Agarwala, Group CEO, Housing.com, Makaan.com, and PropTiger.
Prices continued to remain stable and overall outlook looks positive, he added.
"While the trends point to a market recovery and positive news given the imminent launch of a vaccine that will ease the pandemic concerns, our optimism should be cautious. Buyers continue to expect low home loan rates, extension of developer offers and prefer ready to move inventory than those under construction," said Mani Rangarajan, group COO, PropTiger and Housing.com.
The government should continue to support the sector through moves such as lowering stamp duty, re-evaluating circle rates and increasing tax deduction limit for interest on home loans to ensure that the sector continues to revive, he added.