The unsold stock of residential units is showing no signs of tapering in the Delhi-NCR market. Data from PropEquity shows inventory overhang is at a five-year high in NCR with 2.10 lakh units remaining unsold in the five months of January-May 2015, while in the Mumbai Metropolitan Region (MMR) the unsold stock is coming down, but still remains high when compared to levels seen in 2010.
Though the June numbers are awaited, PropEquity told FE there is unlikely to be a major change in numbers.
Property markets in key Indian cities continue to remain stressed, as sales are falling sharply. The study showed that in NCR, absorptions levels have dropped 63% in January-May 2015 to just about 17,300 units getting sold, compared to the first five months of 2010, when over 47,000 units were sold. However, the pile up in MMR, which continues to remain high, has tapered in a year. The unsold stock at 2.04 lakh units is down about 9% from January-May 2014.
Interestingly, while the levels of unsold stock in NCR and MMR range around the same levels, the aggressive launches in NCR and comparatively slower absorptions will mean the market will take more time to sell the inventories. In MMR, though the absorptions are falling, so is the number of units getting launched.
On y-o-y basis, there was a fall of 41% in the number of launched units seen in MMR to 19,753 units during January-May 2015, while in NCR, the number of units launched fell by 34% to 19,767 units, data showed.
According to a July 9 report of Bank of America Merrill Lynch, Gurgaon’s unsold inventory has seen an exponential rise over 2.5 years. The number of quarters required to exhaust unsold inventory has risen from three quarters in calendar year 2012 to 16 quarters in calendar year 2015.
Meanwhile, in Noida, the situation is abysmal. The housing market continues to remain difficult, with absorption rate lower than 2009 levels, the report said. While new supply or launches have halved compared to calendar years 2008-2013 and there is pressure on pricing, the sales have not picked up. In the three months of April-June 2015, BoFA report says the Noida market witnessed new sales of about 3,800 units, which is lowest in the last eight years. “Absorption rate at 3.7% is lowest in eight years as investors who held the housing market seemed to have deserted the market given poor visibility on timely delivery, price appreciation and exits,” the report said.
Samantak Das, chief economist and director of research, Knight Frank India, said, “NCR now has the highest stock of unsold units among the top seven cities in India. There is high pressure on velocity of sales and we do not expect much traction in sales in 2015 as well”.