Sales of residential real estate have bounced back to 90% of their pre-pandemic levels, said real estate consultant Anarock Property, adding that this has led to a sharp fall in unsold inventory.
“Resultantly, the housing inventory overhang across the top 7 cities plunged to 32 months [less than three years] by 2021-end, closing in on the 30 months reading by 2019-end,” it said.
Unsold inventory of real estate properties in the seven major cities of India had hit a high of 55 months by 2020-end.
The number is an indicator of how long 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 considered relatively healthy at any given period, according to Anarock.
Among the top 7 cities, the national capital region — Delhi and its satellite cities — saw the maximum annual reduction in ts inventory overhang – from 89 months in 2020 to nearly 49 months at the end of 2021.
“Given that this region was the second-best housing sales performer in 2021, the sales momentum here is decidedly upbeat,” the consultant said.
The inventory overhang in Mumbai region fell below 30 months for the first time since 2015, attaining an all-time low of 29 months in 2021.
“MMR recorded the highest sales among all top cities with approx. 76,400 units sold last year – an increase of 72% against 2020. Remarkably, the region now has the second-lowest inventory overhang after Bengaluru,” noted the agency.
Bengaluru, the key market that has turned out to be most resilient among all in India, continues to have the lowest inventory overhang (of 21 months) among all top cities.
“The city is undoubtedly one of the most resilient residential markets in the country, driven by the booming IT/ITeS sector. In 2020, the inventory overhang here stood at 29 months – the lowest then as well.”
The IT sector is in the middle of a boom, with spiraling salaries due to a paucity of talent and a sharp uptick in demand from the US and Europe.
Hyderabad’s inventory overhang too reduced to 30 months in 2021 from 52 months back in 2020.
Though Hyderabad added the 2nd-highest new supply in 2021 after MMR, the current inventory overhang indicates that the market witnessed decent sales in the year, Anarock said.
Pune’s inventory overhang stood at 32 months as of 2021-end. It was 48 months back in 2020 and 27 months as of 2019.
Chennai too saw a considerable drop in its inventory overhang – from 61 months in 2020 to 33 months in 2021.
Kolkata residential inventory overhang has dropped from 69 months in 2020 to 39 months as on 2021-end.
Housing sales in the final three months of 2021 had broken all records of the last 28 quarters (6 years) and breached the 90,000 units mark.
Aiding the sentiment have been factors like an all-time low home loan rates, and anticipation of imminent price hikes and of course, strength in the IT sector.
Puri pointed out that given that real estate majors have been cautious about announcing new projects in recent quarters, unsold inventory is likely to reduce further in coming months.
He warned, however, that the recovery is subject to disruption by a ‘high-impact’ COVID wave.