The National Capital Region (NCR) emerged as the frontrunner in reducing overall residential inventory overhang in the last five years, due to strong homebuyers’ sentiments, demand for luxury homes and lower home loan rates.
According to an Anarock report, NCR achieved a reduction of 43 months in its 5-year stock of homes, from 66 months by the first quarter of calendar year 2018 to 23 months by Q1 of 2023.
Inventory measured in months indicates the time it will take for the current unsold housing stock on the market to sell at the current absorption rate. An inventory overhang of 18-24 months is normally considered healthy.
“This is the best that the region has seen in the past five years. In fact, inventory overhang in NCR had peaked at 88 months in Q4 2020," said Anuj Puri, chairman, Anarock Group.
However, housing inventory overhang across the top-7 cities plunged to just 20 months by Q1 of calendar year 2023, from 42 months by Q1CY18, reaching the lowest in the last five years. Inventory overhang in the top-7 cities in the past five years was the highest by Q1CY20, at 55 months.
The cumulative unsold stock in the top 7 cities saw a 12 per cent decline in the past five years, from 713,400 units by Q1CY18 to about 626,750 units by Q1CY23.
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NCR was followed by Mumbai metropolitan region where the inventory overhang shrunk by 34 months in this period.
Developers credited it to the upswing in demand in the past one year, which has been at an all-time high, The asserted that last year was one of the best for residential real estate in over a decade.
“All major metros have seen consistent sales growth in the past financial year, including Delhi and the NCR. Delhi, being the national capital, with its changing consumer behaviour and demand, is experiencing a rapid rise in demand, leading developers to redirect their focus back to the city,” said Aakash Ohri, group executive director and chief business officer, DLF.
This steadfast demand has seen the Delhi real estate market gradually move from a secondary market to a primary development opportunity, with plenty of luxury gated high-rise communities coming up in the city that offer all amenities, facilities, and safety within the complex, Ohri said.
Pradeep Aggarwal, founder & chairman, Signature Global India said that the present momentum in the real estate industry is set to catapult new project launches to unparalleled success.
“As we move through the year, it is anticipated that these projects will be sold out at a faster pace than ever before, resulting in lower unsold inventory by the end of the year. The demand for quality housing is on the rise, and the real estate market is primed to meet that demand with enthusiasm and vigour,” Aggarwal said.
NCR-based developers believe the past one year had been the turnaround period for the real estate market as the residential segment especially recovered from the pandemic lows. The demand for independent floors and luxury housing has been increasing and this trend is expected to continue.
“The recent pause in the repo rate by RBI is a strong indicator of impending improvement in the global economic scenario and moderation in headline inflation. We anticipate the demand to be strong this year. That said, the developer’s credibility and track record to deliver shall be pivotal for this demand generation,” said Vivek Singhal, CEO, Smartworld Developers.
The significant rupee depreciation is further expected to add to demand from foreign investors/NRI segment, making real estate in India an attractive investment proposition, Singhal said.
The first quarter recorded all-time high sales of more than 114,000 units. The report mentioned that MMR recorded the highest sales among the top cities, with about 34,690 units sold in the quarter, up 182 per cent from the same period in 2018. However, NCR was the third-best housing sales performer in Q1CY23.
