Residential sales across tier-1 cities grew by 13 per cent in FY 18 as prices remained stagnant, pulling in customers who have been sitting on the fence for long. This could signal the sector’s recovery from a slowdown that has battered it in the last few years.

The growth was led by Mumbai at 25 per cent, followed by the National Capital Region (NCR), which witnessed a 19 per cent increase in sales, according to annual numbers released by real estate consultant Liases Foras today.

Weighted average prices across all tier-1 cites remained stagnant due to high unsold inventory, which has put pressure on prices, it added. The highest jump in year-on-year sales was seen in the sub-Rs 25 lakh category, with 24 per cent improvement, indicating an increasing preference for affordable homes. Sales in the luxury segment (Rs 1 crore to Rs 2 crore) also increased by 13 per cent annually.

In the South, Chennai and Bengaluru have shown a slowdown, with sales numbers dropping by 15 and 5 per cent respectively, while Hyderabad witnessed a growth of 17 per cent.

New launches, however, remained muted barring in Mumbai, Hyderabad and Kolkata, which witnessed a growth of 42 per cent, 53 per cent and 29 per cent respectively. “With a growth in sales and drop in new launches, the unsold inventory in tier-1 cities is down from 953,856 units in March 2017 to 929,415 units at the end of FY18,” the release said.

In terms of months, the unsold inventory is down to 41 from 47 months. Yet, the market is far from efficient because an efficient market maintains inventory levels of only about 8 to 12 months. “High inventory levels indicate a downward pressure on prices across all the major cities in India,” Liases Foras cautioned.

On a quarterly basis, sales were up 13 per cent over the year-ago period. Except Kolkata, all tier-1 markets displayed recovery during the quarter. Chennai led with a 27 per cent quarter-on-quarter increase in sales, followed by Pune and Hyderabad. Over 53 per cent of the sales of this quarter were contributed by the sub-50 lakh segment, followed by the Rs 50 lakh to Rs 1 crore category.

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