The inventory overhang in the residential real estate sector, in terms of months to sell, dipped to 33 months in December 2022, compared to 42 months a year ago, the Economic Survey for 2022-23 showed.

Housing prices are also showing a rising trend, both indicators of resilience in demand for housing.

Unsold inventories in the residential sector, were at 8.5 lakh units at the end of 2022, with about 80 per cent of the unsold stock accounted for by projects under construction, the Survey said. “This comes on the back of sustained sales momentum as the sector steadily recovers from the impact of the pandemic,” it added.

Data showed that the unsold inventory rose from slightly over 7 lakh units in the first quarter of this year, as launches exceeded sales for the first time in nine years.

The Survey said going forward, measures taken to reduce the impact of rising commodity prices such as reduction in the import duties on steel products, iron ore and steel intermediaries “will cool off the construction cost and help check the rise in housing prices.”

The Survey said despite the rise in home loan rates and property prices, the housing sector saw resilient demand in the current fiscal with housing sales and launches surpassing the pre-pandemic level.

Housing prices

The outbreak of hostilities between Russia and Ukraine in early 2022 disrupted the global supply chain and it had an impact on the real estate sector due to the surge in prices of construction materials that led to developers halting construction.

The Survey pointed out that the wholesale price index for cement, lime, and plaster rose to 137.6 in December 2022 from 127.1 a year ago “indicating an uptick in the input cost for construction”.

The Survey said the housing price tracker computed by the National Housing Bank showed that housing prices are trending up on a pan-India basis, an indicator of revival in the housing finance sector and by extrapolation to the demand for housing.

A stable to moderate increase in the index “also offers confidence to homeowners and home loan financiers in terms of the retained value of the asset,” the Survey said.

The market price index, which is based on the market prices for unsold inventories went up from 100 in June 2018 (the base year) to about 115 points in the second quarter of FY23.