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Housing stock almost doubles in key cities of India

Housing unitsIn the last three years, the number of unsold housing units in prime cities such as Delhi-NCR, Mumbai and Hyderabad have nearly doubled, indicating that the real estate in India would need a long time to recover from.

Liases Foras, a real estate consultancy and research firm has revealed that the stock level of residential units in NCR has reached 31 months at the end of March 2013 against 15 months at the end of March 2010. Mumbai Metropolitan Region (MMR) has observed a 40 months inventory at March 2013 against 17 months at the end of March 2010 while the inventory level was at 49 months at March 2013 in Hyderabad against 23 months at the end of March 2010.

The number of months of inventory refers to the time required for the stock to get cleared at the existing absorption rate. Maintaining 8-10 months of inventory is considered to be healthy for any market in India.

Homebuyers are hesitating to step forward to buy properties as they are concerned about several factors such as market slowdown, home loan rates and so on. So they prefer to wait and watch the market before making a decision. Despite the dull market, builders continue to launch new residential projects in order to generate more revenue, which has added to the huge inventory levels.

Market analysts opine that builders have to consider certain timelines as per the license/lease agreement before developing any project. Along with getting approval for the project, this is an important aspect to look at.

Pricing was the prime factor for most of the projects that were launched in the recent past. owing to global slowdown and mispriced projects, the developers were of the opinion that projects would only be successful if they were launched at lucrative prices, said a realty expert.

The real estate in India is not moving at a fast pace because either there is oversupply of projects in the market or the absorption level has dropped down, resulting in high inventory level. Contradictorily, the prices of properties are not being reduced despite the huge piling up of stock. It is mostly because the developers wait for a better time with a hope to sell the units for some or more profit. Later some of them offer freebies, discounts and different schemes in order to lure buyers and clear the inventory. Some leading developers come up with attractive offers during pre-launch of their projects.

However, since the sales are low, the buyers are likely to get properties at reasonable rates, or at least can negotiate for a better price. Hence, increasing inventory is supposed to be the perfect time for buying properties.

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Image courtesy of Sujin Jetkasettakorn at FreeDigitalPhotos.net

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