Housing sales fell 11 percent during the last fiscal year across nine major cities of the country, but the demand for ready-to-move-in residential units rose while that of under-construction flats dipped, according to online property brokerage firm PropTiger.
The share of ready-to-move-in inventory as a percentage of total sales rose to 20 per cent during the 2019-20 financial year as against 15 per cent in the previous fiscal, as per the housing brokerage firm’s latest report ‘Real Insight Q4′ 2020’.
As per the data, total housing sales during the last fiscal stood at 3,22,667 units across nine cities, nearly 11 per cent down from 3,62,021 units sold in the 2018-19 fiscal.
PropTiger tracks property markets in nine cities including Ahmedabad, Bengaluru, Chennai, Gurugram (includes Bhiwadi, Dharuhera and Sohna), Hyderabad, Kolkata, Mumbai (includes Navi Mumbai and Thane), Pune and Noida (includes Greater Noida, Noida Extension and Yamuna Expressway).
In line with expectations, the demand for ready-to-move-in residential properties is growing as customers have become risk averse because of uncertainties involved in the completion of under-construction flats.
The government’s move to establish a 225,000 crore stressed assets fund to help complete over 1,500 stalled housing projects across the country would go a long way in bridging the trust deficit between developers and prospective homebuyers.
The sale of completed units rose to 64,386 units last fiscal from 53,908 units in the 2018-19 fiscal year. The demand for under-construction apartments dipped to 2,58,281 units in the 2019-20 fiscal year from 3,08,113 units in the previous year.The share of ready-to-move-in residential properties in the overall housing sales is expected to increase and may reach 30 per cent during this fiscal, said PropTiger.
Project delays by multiple builders have shaken buyers’ confidence in the property market.
“Housing demand remained subdued during FY’20 because of the slowdown in the country’s economic growth. The global outbreak of coronavirus added to the woes faced by the Indian realty sector over the last few years. Housing sales are generally higher in the second half of the fiscal and hence the impact of Covid-19 was more pronounced,” said Dhruv Agarwala, group CEO, PropTiger.com, Housing.com and Makaan.com.
“With under-construction projects likely to be delayed because of the nationwide lockdown, we strongly believe that customers’ preference towards completed units will further strengthen,” added Agarwala.
The government’s move to establish a 225,000 crore stressed assets fund to help complete over 1,500 stalled housing projects across the country would go a long way
in bridging the trust deficit between developers and prospective homebuyers.
Besides the risk mitigation, the government’s decision not to levy the GST on completed units is also driving the demand for ready-to-move-in homes.
Other trends observed by PropTiger are that housing demand is likely to further shift to branded developers and brokers and that Covid-19 would also accelerate the adoption of new digital tools and technologies by both property developers and brokers to sell housing units.
At the end of the 2019-20 fiscal, these nine cities had 7,38,898 units of unsold inventories. Ahmedabad had 41,538 unsold units, of which 26 per cent were ready-to-move-in. Bengaluru had 75,001 unsold inventory and out of that 25 per cent was completed. In Kolkata, too, 25 per cent of the total 33,966 unsold homes were ready-to-move-in. In Chennai, 36,948 units remained unsold, of which 30 per cent were ready-to-move-in. As many as 43,276 units were unsold in Gurugram and of that 24 per cent falls in the completed category. In Hyderabad, only 13 per cent of the total 31,118 unsold units were ready-to-move-in. Mumbai had 279,229 unsold units at March ’20 end and out of that 14 per cent were completed.