Indian residential property market held its own in 2021, with sales rebounding to more than 90% of the pre-pandemic 2019 levels. Unsold Inventory Down to 32 Months From 55 Months by 2021-end, Close to 2019 Levels
By Varun Singh
The Indian residential property market held its own in 2021, with sales rebounding to more than 90% of the pre-pandemic 2019 levels. Resultantly, the housing inventory overhang across the top 7 cities plunged to 32 months by 2021-end, closing in on the 30 months reading by 2019-end. ANAROCK data shows that the inventory overhang in the top 7 cities stood at 55 months by 2020-end.
Inventory measured in months indicates the number of months it will take for the current unsold housing stock on the market to sell at the current absorption rate. An inventory overhang of 18-24 months is considered relatively healthy at any given period.
Anuj Puri, Chairman – ANAROCK Group, says, “Among the top 7 cities, NCR remained the frontrunner in reducing overall inventory in the last one year from 89 months in 2020 to 49 months in 2021. It is close to reaching the pre-pandemic levels of 45 months in 2019-end.”
“In 2021, the top 7 cities recorded sales of approx. 2.36 lakh units”, says Puri. “Housing sales in the 4th quarter (Oct.-Dec.) broke all records of the last 28 quarters (6 years) and breached the 90,000 units mark. Factors like positive homebuyer sentiment, all-time low home loan rates, and anticipation of imminent price hikes helped housing sales touch a new high, bringing down overall residential inventory overhang across the top cities.”
Factoring in the current housing sales momentum and guarded new supply across cities, the overall inventory overhang may reduce further in the coming quarters – if a high-impact third COVID-19 wave does not break the pace. Currently, the impact is minimal, with fewer hospitalizations and a reduced mandatory quarantine period of just 7 days against the previous 14 days.
MMR & NCR: Top Hotspots
- Among the top 7 cities, NCR saw the maximum annual reduction (by 39 months) in its inventory overhang – from 89 months in 2020 to nearly 49 months at the end of 2021. Given that this region was the second-best housing sales performer in 2021, the sales momentum here is decidedly upbeat.
- The inventory overhang in MMR has sunk below 30 months for the first time since 2015, attaining an all-time low of 29 months in 2021. MMR recorded the highest sales among all top cities with approx. 76,400 units sold last year – an increase of 72% against 2020. Remarkably, the region now has the second-lowest inventory overhang after Bengaluru.
- Bengaluru presently has the lowest inventory overhang (of 21 months) among all top cities. The city is undoubtedly one of the most resilient residential markets in the country, driven by the booming IT/ITeS sector. In 2020, the inventory overhang here stood at 29 months – the lowest then as well.
- Hyderabad’s inventory overhang reduced to 30 months in 2021 from 52 months back in 2020. Though Hyderabad added the 2nd-highest new supply in 2021 after MMR, the current inventory overhang indicates that the market witnessed decent sales in the year.
- Pune’s inventory overhang stood at 32 months as of 2021-end. It was 48 months back in 2020 and 27 months as of 2019.
- Chennai too saw a considerable drop in its inventory overhang – from 61 months in 2020 to 33 months in 2021.
- Kolkata residential inventory overhang has dropped from 69 months in 2020 to 39 months as on 2021-end.