The real estate sector has been hit hard by the COVID-19 pandemic, as a PropTiger report shows that housing sales in the first half of 2020 plunged around 52% across eight major markets. Around 88,593 units were sold during January-June 2020, compared to over 1.85 lakh units sold during the corresponding period last year.
Supply was severely impacted as 48,232 units were launched during the period under review, 65% lower than the 1.36 lakh units a year ago.
The cities surveyed are Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Pune, Delhi-NCR, including Noida, Greater Noida, Gurugram, Ghaziabad and Faridabad and the Mumbai Metropolitan Region (MMR) including Mumbai, Navi Mumbai, Thane.
The second quarter of 2020 was the worst hit as only 19,038 units were sold across the tier-I markets during the period, 73% lower than 92,764 units in Q2 2019.
Affordable housing units priced up to Rs 45 lakh, continued to dominate the real estate sector accounting for a 44% share of all sales.
New launches also decreased significantly during this period as developers remained cautious during a period when commercial activity across sectors slowed down.
Launches decreased 81% during the quarter ending June 30 to 12,564 units. Launches declined significantly across cities, especially in Mumbai, Pune, Kolkata and Chennai.
"While developers are increasingly offering schemes such as flexible payment plans, selective discounts and price protection plans to attract buyers, developers are understandably cautious and are focused on completing existing projects. In fact, delivery of existing projects may get pushed back depending on how quickly the supply-chain, labour availability and liquidity inflows are restored, said Mani Rangarajan, Group COO, PropTiger.com.
He said, "We are unlikely to see new launches increase significantly for the next few quarters as developers wait for demand revival and augment their cash flows through sales of existing units. Notwithstanding these lacklustre results, buyers continue to affirm their faith in real estate as an asset class with over a third of our surveyed buyers choosing it as their preferred form of investment."
The report showed that when compared to the levels seen during the same quarter last year, unsold stock declined 13% in the eight cities, primarily on account of a fall in new launches.
As on June 30, 2020 developers had an inventory consisting of 7,38,335 units across these markets. At the end of Q2 2019, the unsold stock stood at 8,46,460 units.
Inventory overhang, however, has increased to 35 months as against 28 months last year. Inventory overhang is the time developers would take to sell off the unsold stock keeping in view the current sales velocity. At 53 months, the inventory overhang is the highest in the NCR market.
The report said that nearly 20% of the unsold inventory is in the ready-to-move-in category.