Home demand resilient, inventory overhang dips: Eco Survey
The 2022-2023 Economic Survey showed that the inventory surplus in the residential real estate sector, in terms of months to sell, fell to 33 months in December 2022, compared to 42 months a year earlier.
Housing prices also show an upward trend, both of which are indicators of resilience in housing demand.
The survey said that unsold inventories in the residential sector reached 8.5 units at the end of 2022, with about 80 percent of unsold inventory represented by projects under construction. “This comes on the back of continued sales momentum as the sector steadily recovers from the impact of the pandemic,” she added.
The data showed that unsold inventory rose from just over 7 units in the first quarter of this year, as launches outpaced sales for the first time in nine years.
The survey said that measures taken to limit the impact of rising commodity prices such as lowering import duties on steel products, iron ore and steel brokers “will ease the cost of construction and help check the rise in housing prices.”
Despite the rise in home loan rates and real estate prices, the housing sector has seen resilient demand in the current public finances, the survey said, as home sales and launches have surpassed the pre-pandemic level.
housing prices
The outbreak of hostilities between Russia and Ukraine in early 2022 disrupted the global supply chain and had an impact on the real estate sector due to soaring building material prices causing developers to halt construction.
The survey indicated that the wholesale price index for cement, lime and gypsum rose to 137.6 in December 2022 from 127.1 a year earlier, “which indicates a slight increase in the cost of construction inputs.”
The survey said the tracker of house prices computed by the National Housing Bank showed that house prices are trending upwards on a pan-India basis, which is an indication of recovery in the housing finance sector and by extrapolating the demand for housing.
The stable to moderate increase in the index “also provides confidence to homeowners and home loan financiers in terms of the asset’s retained value,” the survey said.
The market price index, which is based on market prices for unsold inventories, rose from 100 in June 2018 (the base year) to about 115 in the second quarter of fiscal year 2018.