Mumbai, Delhi-NCR have highest inventory overhang among top-eight cities: PropTiger

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July 08, 2021 12:30 AM

It will be more a supply driven price increase as it will become very difficult for developers to continue to supply at current prices, Rangarajan explained.

Mumbai, Delhi-NCR have highest inventory overhang among top-eight cities: PropTigerDelhi’s weighted average price rose a mere 2% y-o-y to Rs 4,337 per sq ft, which is already the highest in last 14 quarters.

Developers are sitting on 1.03 lakh unsold units in Delhi-NCR as of April-June 2021, which is second highest after Mumbai, according to PropTiger.

Delhi-NCR and Mumbai have the highest inventory overhang among the top-eight cities. PropTiger said that inventory overhang in Delhi increased to 64 months in Q2 2021 from 53 months a year-ago. However, it is proportionately distributed across the region, except Faridabad, which had a share of 5%.

Ready to move in (RTMI) units accounted for 42% of the total unsold stock, which is concerning as PropTiger data suggests that in Q2 2021 only 23% of total units sold were RTMI while the rest were under construction. Majority of buyers are opting either for RTMI units in sold out projects or in under-construction ones to be delivered in 6-9 months.

On price momentum, PropTiger.com group COO, Mani Rangarajan said this is a highly price sensitive market. Labour, raw material and compliance costs have increased. Input tax credit is also an issue. Developers are under a lot of pressure.

“Personally, I believe that probably over the next two quarters, we will start seeing some escalation in prices. Some developers when we met them said they will have to increase prices by a coupe of percentage points. If demand holds up, you will see some price increase over the next six months. We will definitely not see a 7-10% price increase, but a couple, like 2-3% over the next six months,” he added.

It will be more a supply driven price increase as it will become very difficult for developers to continue to supply at current prices, Rangarajan explained.

According to PropTiger, the Delhi NCR housing market has been gradually coming out of the uncertainties forced by the pandemic with the region recording sales of 2,828 units in Q2 2021, which rose 50% y-o-y, but fell 54% q-o-q. The sales in Q2 2021 were the second lowest in more than 3 years after Q2 2020 (1,886 units).

In April-June 2021, only 818 residential project were launched, the lowest in over three years. Delhi’s weighted average price rose a mere 2% y-o-y to Rs 4,337 per sq ft, which is already the highest in last 14 quarters.

The impact on demand also becomes concerning as during April-June 2021 sales were largely concentrated in the less than Rs 45 lakh bracket (57%), followed by 18% in the Rs 45–75 lakh segment. A third wave of infections could force buyers in these two affordable housing categories to halt purchases till the time economy stabilises.

On the brighter side, affordable housing brought NCR back in the game, especially in Gurgaon, Rangarajan said. “Noida Extension has seen strong growth, and so did Noida Expressway. Two years back there was no demand here as prices were high. New Gurgaon, Sohna road and Dwarka Expressway are also doing well,” he added.

A leading player in the affordable housing segment in Delhi NCR, Signature Global’s chairman Pradeep Aggarwal said sales continued to climb due to record low home loan interest rates, subdued residential pricing and buyer-friendly payment choices. The majority of transactions are completed by first-time homebuyers, which is a positive trend as they account for most sales.

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