The NCR residential market is stuck with an estimated inventory of 1,70,000 units while another 90,000 dwelling units under-construction are likely to be delayed for hand-over, reveals the ASSOCHAM recent survey.
“A large inventory is piling up despite prices correcting by over 20 per cent in the last one year, while there is a huge fall in the new projects being launched by developers who are hard-pressed for cash,” the paper noted with concern.
The increase in inventory level is because of the falling demand from actual users as also the investors. Even the ready-to-move flats are finding few buyers, reveals the majority of the respondents.
The ASSOCHAM conducted a random survey of nearly 120 real estate developers in Delhi-NCR. The survey reveals that demand for buying property have decreased by over 30-35% over the last year.
The ticket price 3-bedroom, 2 BHK and single room flats has seen correction by 30 per cent in Noida, 25 per cent in Gurgaon and 15 per cent in some key areas of Delhi but still, the demand stays subdued, adds the survey.
“The sentiment in the housing market is really at a low key. Even though there are signs of macroeconomic improvement, it would be a quite a lag before it gets reflected on the real estate markets”, said Mr D S Rawat ASSOCHAM Secretary General while releasing the survey.
One of the issues afflicting the sentiment is the high level of debt with the real estate developers and their poor valuations in the stock markets, limiting their avenues for repair of the balance sheets. “Somehow, it reflects in the timely delivery of the projects, coupled with the problems created by high interest costs despite some course correction by the Reserve Bank of India (RBI)”, the paper pointed out.
According to the survey, the residential market has witnessed a steep decline by 30-35% in new launches as well as demand resulting a significant shrinkage. The unsold inventory pressure in NCR region is the highest among all cities, it said.
According to the majority of real estate developers in NCR regions said, about 60% of the unsold real estate in NCR is in areas which are currently uninhabitable. The sales have slowed down in NCR as well. The problem has been confounded by delays in regulatory clearances and litigations, points out the survey.
The NCR residential market still has an estimated 1,67,000 units of unsold inventory which is approximately 30% of the units under construction, adds the survey.
As per the survey, there are nearly 8.5 million workers engaged in building and other construction activities in India.
Average housing prices remained stable in national capital region (NCR) during the year as compared with the previous period, according to ASSOCHAM latest survey. The increase in inventory level is because of the falling demand and sales in the sector as genuine buyers are deterred.