Comments
Mumbai remains the most unaffordable market with 29 per cent of the city’s total under-construction units surpassing the Rs 1-crore mark, as compared to 11 per cent and 5 per cent for the NCR and Bangalore markets respectively, according to a new report.
Bangalore remains the most affordable residential market with more than 77 per cent of its total under construction units falling below the ticket size of Rs 50 lakh. This is followed by Chennai at 75 per cent, says a Knight Frank India report, which tracks the real estate sector.
While Hyderabad has only 51 per cent of its total under construction units below the Rs 50 lakh ticket size, this is despite the city having the lowest weighted average price among the top six cities, the report adds.
Inventory
The report has indicated that price movement and ticket size split of under construction units directly impacts the demand for housing in a city. In order to understand the demand supply dynamics of a market, the agency has calculated the Quarters to Sell Unsold Inventory (QTS) ratio for each of the top six cities.
QTS is the number of quarters it will take to exhaust the existing unsold inventory in the market. A lower QTS ratio indicates a healthier market. For instance, a QTS ratio of 6 in March 2013 signifies that it will take six quarters for the market to absorb the current unsold units.
Hence, going forward, if no new units are launched, the report adds that existing unsold inventory will get exhausted by September 2014. The report has identified Hyderabad as having the highest QTS ratio at 9 as of March 2013 among the six cities under consideration. Slowdown in demand on the back of political uncertainty, unaffordable ticket size and sluggish growth in the IT/ITeS sector has resulted in the city’s residential market witnessing such a high number. Additionally, a slew of launches in the last four quarters have created a supply glut ensuring a higher QTS ratio, the report adds.
Mumbai follows Hyderabad in terms of QTS ratio at 7 as of March 2013.
The ratio has been on a constant rise since December 2011 and has increased from 5 to 7 during this period. Incessant price rise and higher concentration of premium projects have limited the purchasing ability of home buyers, resulting in a decelerating rate of absorption over the previous four quarters.
Furthermore, the large number of new launches in the previous four quarters has significantly increased the unsold inventory in the market, the report adds.
Peripheral locations near Mumbai like Vasai, Virar, Mira Road, Ghodbunder Road and Panvel witnessed a slew of new launches during the last one year.
However, despite the waning interest of home buyers, the report adds that quoted prices in Mumbai continue to remain high as developers are increasingly offloading their unsold inventory at a discount to investors who are willing to make a substantial upfront payment.
The report adds that health of the residential market in cities like Bangalore, Chennai and Pune has remained relatively stable over the last one year.
The health of the NCR market, on the other hand, has marginally improved from December 2012 to March 2013, as the quantum of new launches has significantly reduced during this period.
amritanair.ghaswalla@thehindu.co.in
Comments
COMMENT NOW
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.