High Home Demand Reduces Unsold Stock

The significant drop in the unsold housing stock ahead of the festive season bodes well for the residential real estate.

Unsold housing stocks in Tier 1 cities in India dropped to 5,08,464 units in Q3 2023 from 5,26,497 units in Q3 2022, representing a  crucial 11% decrease. PropEquity research data shows that in Delhi-NCR region ,unsold stock dropped by 7 percent in the third quarter of 2023 as compared to Q2 2023, while residential property sales continued the upward momentum gained after the pandemic. On the other hand, new launched increased by 2% in tier one cities to 97,871 units in July to September 2023 from 96,408 units in the previous year.

While this quarter saw a decline in new launches of 11% on Q-o-Q basis, due to lower demand owing  to rise in property prices as well as mortgage rates, developers are strategically prioritizing the reduction of older unsold inventory, resulting in a decline in unsold stocks, while also launching fewer new projects. “Housing prices have been climbing in major Indian cities in the post-COVID years. While this upward trend in capital values is attracting investors to India’s key real estate markets, there is reduction in unsold housing stock. However, due to appreciation in both prices and mortgage rates, housing demand is currently facing challenges. Going forward, if interest rates on home loans remain stable or even soften in the coming months, we anticipate an increase in housing demand.” ,says. Samir Jasuja, Founder & CEO of PropEquity.

The real estate market across the country has witnessed a price appreciation; the consumer sentiment has continued to stay robust as the pandemic reshaped the importance of owning a home rather than renting one. “Despite increasing interest rates and marginal property prices, there is still parity between the prices and affordability and  sales volumes are likely to stay strong despite  global headwinds as India has navigated the scenario well so far. Also, with the coming festive period, we can expect sales to be northbound.” said Ankush kaul, Chief Business Officer at Ambience Group.

Bull Run in real estate, initiated in 2022, persists into 2023. Analysis of the first three quarters reveals that new property launches in Tier 1 cities remain consistent with 2022 levels. The standout, however, is an unprecedented surge in demand, poised to hit 5 lakhs—a decade-high. With an 8% rise in absorption compared to last year, the market’s resilience is evident. Pune, Hyderabad, and Thane, including Kalyan, Bhiwandi, Panvel, and Vasai, have emerged as leaders in new launches and absorption over the past two years.

The real estate landscape continues to evolve, promising ongoing opportunities for developers and buyers alike in the months ahead. During  the festive quarter,   the real estate market is poised for a surge in new property launches. Notably, 2022 and 2023 have emerged as historic milestones for real estate in Tier 1 cities across India. This remarkable success can be attributed to the unwavering trust that investors and end-users have placed in tangible assets, particularly in the wake of the post-COVID era. Additionally, the regulatory reforms introduced in 2017 have played a pivotal role in instilling confidence among investors and buyers, thereby contributing to the current all-time high levels of supply and absorption. This serves as a testament to the renewed faith in the real estate sector, reflecting a robust and resilient market.

Real Estate Trends of Tier- 1 Cities:

Hyderabad  witnessed 46 percent rise in new launches on Q-o-Q basis, 5percent  increase in total absorption and 6 percent decline in unsold stock.  Thane saw 2 percent drop in new launches,2 percent in total absorption and 14 percent decline in unsold stock. : Total Absorption in Pune increased by 3 percent with  a 12 percent drop in unsold stock on Q-o-Q basis. New launches and total absorption of Mumbai witnessed a decline of 24 and 19 percent respectively in third quarter of 2023. On the other hand, unsold stock also decreased by 14 percent.  Bengaluru saw a 24 percent increase in new launches and 13% in total absorptionon Q-o-Q basis.  Delhi NCR witnessed a surge in supply of new residential units with 5,450 launches by various developers in Q3 2023, marking a 9 percent year-on-year growth.In  Navi Mumbai , there is rise of 77 percent in new launches, 5 percent rise in total absorption on Q-o-Q basis and 3 percent decline in unsold stock.  Chennai witnessed a 19 percent drop of new launches and 3 percent drop in unsold stock.  Kolkata witnessed a downfall of 45 percent in new launches and 13 percent increase in total absorption.