NCR Buyers Trust Under-Construction Homes: PropTiger Study
Home sales in Gurgaon and Noida, the two crucial realty markets in the national capital region (NCR), continued to fall in the Q2FY20, despite the initiatives launched by the developers to arrest the fall. These property markets have been particularly impacted by a national slowdown that India’s realty sector hasn't been able to shrug off despite adopting emergency measures.
PropTiger.com data shows home sales in these two markets fell by 47 per cent in the September quarter year-on-year to a mere 5,569 units. Last year, a total 10,516 homes were sold in the second quarter in Gurgaon and Noida. A closer look at the sales numbers, however, reveals an interesting feature. Buyers in the NCR continue to prefer under-construction units despite the various cases of project delays in the region. Of all the units sold during the quarter, 74 per cent were ready under-constriction homes, data show.
Establishment of the real estate regulatory authorities (RERA) Haryana and UP has also ensured higher compliance levels among builders in the two states. “The state authorities have certainly forced builders to give viable project completion deadlines in their builder-buyer agreements now, unlike in the past when they would give unreasonable delivery deadlines to attract buyers,” explains Dhruv Aggarwala, group CEO, Elara Technologies.
Meanwhile, cash-starved builders struggling to complete ongoing projects due to the lack of funding sources, are continuing to show restraint in launching housing schemes. New launches in the region fell by 12 per cent. When compared to the previous quarter, the fall is comparatively more prominent at 61 per cent. Individually, new launches in Gurgaon, however, increased year-on-year, with a 27 per cent rise.
Despite an eight per cent annual decline in unsold inventory in the NCR, inventory overhang here has increased substantially in the past one year, far exceeding the national average. As against the 28-month national average, inventory overhang in the NCR now stands at 37 months - last year, overhang stood at 31 months. For the uninitiated, inventory overhang shows the time developers might take to offload the unsold stock in a particular housing market, depending on the current sales velocity. Of the more than 7.98 lakh units that currently lie unsold in the nine major residential markets of the country, over one lakh are concentrated in Gurgaon and Noida.