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Over four lakh affordable houses unsold in nine cities

Also, not much improvement is anticipated in the new supply as developers are focusing on completing existing projects and clearing stocks-in-hand

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The inventory pile-up is not restricted to luxury apartments only as there are over four lakh apartments in the affordable segment still lying unsold across nine cities in the country. However, there is some good news for the latter. The demand for these apartments costing less than Rs 45 lakh could improve post the government's decision to increase the income tax deduction limit on home loan interest to Rs 3.5 lakh from Rs 2 lakh earlier.

According to property brokerage firm PropTiger.com, real estate companies have 4.12 lakh unsold apartments costing less than Rs 45 lakh. "A low interest rate regime along with the measures announced in the Union Budget to push affordable housing would encourage homebuyers to invest actively in this category now," said Dhruv Agarwala, group chief executive officer of Housing.com, PropTiger.com, Makaan.com and Fastfox.com.

PropTiger said that realtors had unsold inventories of 7,97,623 units at the end of the June quarter in nine cities – Mumbai, Pune, Ahmedabad, Gurugram, Noida, Bengaluru, Hyderabad, Chennai and Kolkata. Out of this total unsold housing stocks, PropTiger said 4,12,930 units were in the affordable segment.

Also, not much improvement is anticipated in the new supply as developers are focusing on completing existing projects and clearing stocks-in-hand. "With these two factors at work, affordable housing inventory in India's key property markets is likely to decline significantly in the following quarters," said Agarwala.

As per PropTiger data, Mumbai had the maximum unsold affordable housing units at 1,39,984 units, followed by Pune at 98,378 units. Ahmedabad had 41,791 unsold units of Rs 45 lakh and below, while Noida 35,811 unsold units, Kolkata 30,923 units, Gurugram 22,307 units, Bengaluru 20,146 units, Chennai 18,709 units and Hyderabad 4,881 units.

Last week rating agency Icra said that Mumbai market alone had an unsold inventory of nearly Rs 45,000 crore worth of high-value apartments as on June 30, 2019, owing to lack of demand for such units. According to Anand Kulkarni, assistant vice-president, Icra, Mumbai is among the largest markets for luxury residential developments in the country.

"In line with strong growth commercial activity in central Mumbai areas like Worli, Lower Parel and Prabhadevi, demand for the luxury residential segment had started to pick up in the past," Kulkarni said, adding that expecting a further boost in demand, many developers had beefed up the supply in the micro-market.

"As a result of the weakened demand over the last two to three years, central Mumbai has witnessed significant high-value inventory build-up," he added.

The luxury residential segment, the report said, has been the most impacted segment due to the market dynamics and regulatory developments.

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