Money & Banking

Sale of under-construction houses takes a hit

Our Bureau. Mumbai | Updated on July 27, 2020 Published on July 24, 2020

Extension of deadline for completion of projects will help the sector deal with the Covid blow   -  BLOOMBERG

 

 

A nation-wide ebbing of consumer confidence has triggered a preference for purchase of completed houses, which has adversely affected the sale of under-construction houses, according to the Reserve Bank of India’s Financial Stability Report.

As new house launches plunged, the stock of unsold houses shrank (to about 7.30 lakh units in the January to March quarter against about 7.80 lakh units in the preceding quarter) and the inventory overhang (average number of months required to sell a house) dropped.

Under-construction projects constitute 70- 80 per cent of the unsold inventory.

“House price growth remained contained in most cities in FY20. With the suspension of construction activities across the country from mid-March, completion of under-construction projects is likely to be delayed, constraining new demand,” the report said.

With the Covid-19 outbreak, demand and liquidity constraints intensified in the housing sector.

House sales and launches, which had declined by 16 per cent and 35 per cent (y-o-y), respectively, during Q3 (October to December) FY20 were pulled down by around 26 per cent and 51 per cent, respectively, during Q4 (January-March) FY20.

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Published on July 24, 2020
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