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.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.