Coronavirus effect: Housing sales plunge 52% in H1CY20 as COVID-19 hits demand

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Published: July 29, 2020 12:30 AM

The inventory overhang situation in Delhi-NCR is so serious that developers here would require almost four-and-a-half years (53 months) to dispose their unsold flats.

Delivery of existing projects may get pushed back depending on how quickly supply chains, labour availability and liquidity inflows are restored. Delivery of existing projects may get pushed back depending on how quickly supply chains, labour availability and liquidity inflows are restored. (Representative image)

The Covid-19 pandemic has caused unprecedented disruption across the country’s residential real estate sector with sales and launches declining 52% and 65%, respectively, year-on-year during the January-June 2020 period. Apartment prices remained stagnant across almost all the top markets as buyers delayed their purchase plans by up to a year.

Covid-19 has exacerbated the crisis in the already beleaguered industry with developers requiring almost three years (35 months) to sell their unsold inventory; this is against an inventory overhang of 28 months in June 2019, a report by PropTiger said on Tuesday.

The inventory overhang situation in Delhi-NCR is so serious that developers here would require almost four-and-a-half years (53 months) to dispose their unsold flats.

“As anticipated, demand was adversely impacted due to economic uncertainty combined with growing unemployment; in fact, our recent Housing-Naredco buyer survey indicated buyers have pushed back their purchasing decision up to a year,” PropTiger.com group COO Mani Rangarajan said.

Delivery of existing projects may get pushed back depending on how quickly supply chains, labour availability and liquidity inflows are restored. New launches would be few over the next few quarters as developers wait for demand revival and augment their cash flows through sales of existing units, he added.

Covid-19 aggravated the demand slump with sales declining 52% y-o-y to 88,593 units during January-June 2020. Despite being the most-affected cities with the maximum number of Covid-19 cases, Mumbai and Pune dominated sales with a share of 50% in the overall pie.

New launches, too, decreased significantly during January-June as developers remained cautious and commercial activity came to a halt during April. New launches fell 65% on an annual basis to 48,232 units.

Unsold flats declined 13% y-o-y to 7.38 lakh units in June end, but the fall was also due to lower number of new launches. At 56%, the Mumbai and Pune markets together contributed the highest share followed by Delhi-NCR (15%) and Bengaluru (10%).

Due to demand side strain, property prices remained largely muted, with majority of cities showing an annual growth of around 1-3% in the past one year. Hyderabad and Ahmedabad, however, showed comparatively stronger growth, primarily on account of end-user demand in specific locations.

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