The slowdown in the Indian residential real estate segment led by sluggish housing demand, liquidity constraints following the NBFC crisis and high unsold inventory kept home buying sentiment subdued in the last quarter of 2019. Resultantly, barring the IT-driven cities of Pune and Hyderabad, property sales plunged below the pre-demonetisation era across metro cities, despite the festive season kicking in with lucrative discount deals. Average weighted capital prices, too, remained unchanged across cities such as Delhi NCR, Mumbai, Pune and Chennai. Bangalore, Hyderabad, Kolkata and Ahmedabad reported a marginal one percent positive price movement in Oct-Dec 2019 vs the previous quarter.
Continued restriction on new launches reflected the gravity of the ongoing liquidity crisis, which may take a few more quarters to settle. Majority of the new supply in the market this quarter came in the form of re-launched projects. There was an increased emphasis on the completion of stalled or delayed projects as the Government pushed the agenda by introducing stress funds worth Rs 25,000 crore. Roping in its construction arm, National Building Construction Corporation (NBCC) Limited, to take up more projects in Delhi NCR was another step in the direction. The current worth of projects stalled across the country stands at Rs 4.5 lakh crore.
Affordable housing will continue to be the flag-bearer for triggering an improvement in the consumer sentiment in the forthcoming quarters. However, the prevalent demand-supply conundrum seems unlikely to be bridged in the short-term. Additionally, a potential price correction amidst piling inventory too seems to be driving the wait-and-watch approach amongst homebuyers. Currently, across the top eight cities, the inventory overhang stands at 30 months. Mumbai Metropolitan Region (MMR) alone accounts for an unsold stock of 2.20 lakh units at the end of the quarter ending December 2019, one percent lower than Jul-Sep 2019, closely followed by Delhi NCR with 1.77 lakh, and Pune with 92,000 unsold units.