Isn’t it ironic that in a housing market like India where the predominant demand is for ready to move houses, this segment too has a record unsold inventory standing. As per the statistics, out of the total 7.85 lakh unsold inventory, nearly 20 per cent are ready to move. Mind you! We are only talking about the top 8 cities of India. A cumulative figure of pan-India unsold ready to move housi9ng inventory would look even more scary.
This raises certain fundamental questions:
Are ready to move houses unsold due to developers’ poor brand credibility?
Are there lack of liveable conditions behind unsold ready to move inventory?
Is demand & supply mismatch keeping the buyers away from the ready to move houses?
Is this anomaly due to stress in the financial market?
Are discounted secondary market transactions a threat to primary market?
There are more questions than what anyone could convincingly answer at this point of time. However, what could be vouchsafed is the fact that houses being ready to move is no guarantee of getting the buyers. There is something more to the market perception that ready to move housing is being sold off the shelves.
What precisely is ready to move inventory? The inventory status as per the industry statistics is also very flawed. What is being referred as ready to move is not necessarily in a liveable condition. Then some of the ready to move inventory stands at far off locations. Lack of understanding on part of the developers in terms of demand & supply could also be cited as one of the reasons behind unsold ready to move houses.
I come across several projects which would easily fall into the ready to move category but are not in a liveable condition. For example, a developer with huge inventory at Greater Noida West has been buying time with the desperate home buyers for the last three to four years. Reason: He has exhausted all his finance and is unable to either pay dues to Greater Noida Authority nor are any suppliers ready to give him more credit for fit-out and finishing materials.
Industry representatives are nevertheless putting up a brave face that ready to move is doing extremely well. Abhishek Kapoor, CEO, of Puravankara Ltd. insists it may be due to aged inventory or supply from grade B and grade C developers that may not be selling. According to him, we must look at the relevant data related to specific projects to identify the properties which are not selling. He says in his experience ready to move is flying off the shelves. It is today the fastest-selling product.
“Primarily due to consolidation in the sector, there is a demand and supply mismatch where demand is outstripping the supply. There is not enough new supply that is coming in as the number of developers is reducing. In most markets, there is a mismatch and that is why you see the ready-to-move inventory almost exhausted. There are new launches but these are not able to keep pace with the demand and this is leading to price appreciation, also due to inflationary pressures,” says Kapoor.
Aditya Kushwaha, CEO and Director Axis Ecorp nevertheless agrees that the property rates have not appreciated much in the last couple of years. Most home buyers believe that there is a scope for correction and thus resorting to a more cautious approach. The home loan rates have also spiralled in the last six months and that has pruned the purchasing power of the consumers.
“The majority of home buyers are favouring ready to move in properties or projects that are nearing completion. Buyers have shown a clear preference for ready to move in apartments because it saves them money on house rent while they pay the home loan EMIs. In this category, the properties that are unable to find takers are the ones that have poor build quality,” says Kushwaha.
Agreeing that out of the total number of unsold inventories, 20 per cent is ready to move homes, Ashish Narain Agarwal, Founder & CEO, PropertyPistol.com asserts this cannot be a deciding factor to conclude that this segment is not doing good. Ready to move in homes still have preference and a fair amount of demand can be seen for this type of homes along with growing demand for under-construction as well. Buyers who have made their decisions and seek immediate buying can look for ready to move in properties. Customers who mostly depend on loans can opt for projects underway as they get their waiting period.
“Market imbalance is primarily due to demand and supply mismatch. This situation was witnessed during the pandemic when developers were selling old inventories and the market was sluggish before the pandemic. However, the demand was stronger due to the urgency to buy a home, hybrid working styles, need for healthy and safe living, and the need for extra space,” says Agarwal.
Industry stakeholders might be defensive in their acceptance of demand & supply mismatch, added to the fact that many ready to move houses have liveability challenges, but statistics never lie. Nearly 1.5 lakh unsold ready to move houses clearly suggest the developers have failed to understand their buyers and the depth of the given market across the top eight cities of India.
Of course, the demand & supply gap also changes from market to market and some markets might still show some additional supply available, while in others there might be just the right amount of supply to match demand. One would have to analyse the micro markets from city to city. But if one looks at overall conditions, there is a clear demand and supply mismatch behind the unsold ready to move houses and this market imbalance might take another two to three years to clear the inventory.
Ravi Sinha
@RaviTrack2Media
Track2Realty is an independent media group managed by a consortium of journalists. Starting as the first e-newspaper in the Indian real estate sector in 2011, the group has today evolved as a think-tank on the sector with specialized research reports and rating & ranking. We are editorially independent and free from commercial bias and/or influenced by investors or shareholders. Our editorial team has no clash of interest in practicing high quality journalism that is free, frank & fearless.
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