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Mumbai has second-highest unsold housing inventory of 46 months

The number of unsold flats in six major cities is on the rise. It hit the highest at 6.88 lakh units in the January-March quarter, despite banks easing home loan rates, though marginally.

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The number of unsold flats in six major cities is on the rise. It hit the highest at 6.88 lakh units in the January-March quarter, despite banks easing home loan rates, though marginally.

According to a residential market report released by Liases Foras, a real estate rating and research company on Tuesday, Delhi-National Capital Region (NCR) tops the list with unsold 321.68 million square feet, followed by Mumbai at 192.27 msf, Bengaluru (152.43 msf), Pune (70.64 msf) Chennai (64.03 msf) and Hyderabad (52.05 msf).

Despite the pile-up of unsold units, developers have been holding on to their prices, says the report.

Inventory levels across the six cities increased during the quarter by 2.48% to 6.88 lakh units, measuring a total of 919 msf area.

Ideally, the market should maintain 8-12 months of inventory. However, NCR showed the worst at 71 months, while Pune market represented the least, at 18 month. Mumbai stands with 46 months of inventory.

"This is is big paradox for this country, which is facing housing shortage. It is also facing problem of rising inventories. It clearly indicates that the prices are highly unproductive," Pankaj Kapoor, managing director, Liases Foras, told dna.

"We need to have price correction, which nobody is taking into account. New launches are still happening, but sales are declining; this is why, the inventories are rising," he said.

However, Mumbai witnessed a miniscule fall in prices, the maximum being 2.18%, while Pune showed an increase of 1.38% from the previous quarter

A senior banker, explaining the rise in unsold flats, said, "Builders are not passing on the benefits of lower interest rates to the end user and are holding on to their prices."

According to him, builders have been focusing on high-end customers and ignoring the mass base of low-end users, in the hope that the demand would pick up.

"The developers kept on launching spacious units. This is why price-sensitive people, the lower end of spectrum, are not buying. There is mismatch in what the market wants and what they are developing," said Ashutosh Limaye, head, research, Jones Lang LaSalle.

Stakeholders across the country, however, continue to be optimistic about the future of real estate. Delhi and Mumbai are the big drivers of real estate in India and the recent political upheaval and a contentious development plan have weighed heavily on the sentiments in these cities and zones.

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