Sales of residential properties in India’s top eight housing markets grew in the October-December period for a second quarter in a row but the much-needed breather for developers will last only for a short term due to rising inventory, according to real estate research firm Liases Foras.
Sales across the eight markets rose 7 per cent to 78 million sq ft in the three months through December from 72.9 million sq ft a year earlier. The pace of growth, however, was slower than the 17 per cent year-on-year increase recorded in the July-September quarter.
On the bright side, the overall market recorded sequential growth in the third quarter of 2015-16 as sales rose 15 per cent from 67.9 million sq ft in the second quarter through September. “The air of optimism in Q2 2015-16 rolled over to this quarter,” the report said.
Mumbai Metropolitan Region (MMR) maintained its momentum and recorded the best performance among its peers with 35 per cent and 34 per cent jump in yearly and quarterly sales, respectively. The market saw sales volume of 13.5 million sq ft in the third quarter.
Barring Hyderabad and Pune, all other top markets have shown improvement in sales annually, the report said.
Here is a look at the performance of top markets in the third quarter of 2015-16.
Even though sales have started picking up, unsold inventory remains a pain point for developers. The latest quarter saw inventory jump by 21 per cent annually and 5 per cent quarterly to touch 1,124.9 million sq ft.
Broadly, all eight cities witnessed a rise in the unsold stock with Ahmedabad and Pune having shown the maximum jump, followed by MMR. While Pune saw the highest jump (36 per cent) in unsold stock year on year, the NCR market continues to top the chart volume wise as it is sitting on a pile of 361.1 million sq ft.
At the current rate of absorption, the top markets will take 43 months to clear the unsold stock, the report said. A healthy market maintains inventory of eight to 12 months.
Given the strain in the market, the weighted average price of all the major cities during the quarter stood at roughly Rs 6,534 per sq ft, up 1 per cent annually and quarterly. The maximum increase in the weighted average price was 11 per cent in Ahmedabad while the highest decline was 2 per cent in MMR and NCR markets.
With sales yet to revive significantly, the report said that the total new launches during the quarter decreased 11 per cent compared with the previous quarter to reach 67.1 million sq ft with Bangalore seeing the highest addition of 15.8 million sq ft.
MMR saw launches improving 33 per cent from the second quarter while NCR witnessed a 61 per cent decline in new launches. Cumulatively, highest new launches have been in Rs 25–50 lakh range, of which Pune contributed the highest (52 per cent), the report said.