BT Buzz: 5% of India's GDP is stuck in unsold housing inventory
The value of this inventory at Rs 9.38 lakh crore is more than the gross state domestic product (GSDP) of most states including Kerala, Haryana, Madhya Pradesh, Andhra Pradesh, and is almost double the GSDP of Bihar
- Oct 4, 2019,
- Updated Oct 4, 2019 2:33 PM IST
Over 13 lakh houses worth Rs 9.38 lakh crore, or about 5 per cent of India's gross domestic period (GDP), are lying unsold across India as the real estate sector grapples with the worst-ever slowdown in the last many decades.
The value of the unsold inventory is the highest in the Rs 1-2 crore bracket, where 1.28 lakh units valued at Rs 1.8 lakh crore are awaiting buyers, according to data from real estate research and consultancy firm Liases Foras.
This is followed by 2.15 lakh units in the Rs 60 lakh to Rs 1 crore bracket with houses valued at Rs 1.70 lakh crore. The average ticket size of houses in this category is Rs 79 lakh. Unsold inventory includes under construction as well as ready-to-move-in houses.
"This (Rs 9.38 lakh crore) is the potential of saleable houses. But, the sales are just about one-third of what can be actually sold. Efficient markets maintain 12 to 15 months inventory," Pankaj Kapoor, founder and MD of Liases Foras told Business Today.
Current pan-India inventory level is 42 months, implying it will take more than three years to liquidate the unsold housing stock in the country. But, at a city level, the inventory overhang is as high as 80 months in Kochi, 59 months in Jaipur, 55 months in Lucknow and 72 months in Chennai. So, it will take between five and seven years for developers in these cities to get rid of the present housing stock.
"The majority of these units are under construction. To sell them, developers need to give a minimum 20 per cent discount. Then the housing market can gallop. And if it does, it will give a huge fillip to the economy," Kapoor adds.
The value of this inventory at Rs 9.38 lakh crore is more than the gross state domestic product (GSDP) of most states including Kerala, Haryana, Madhya Pradesh, Andhra Pradesh, and is almost double the GSDP of Bihar (Rs 5.7 lakh crore for 2019-20).
Over 13 lakh houses worth Rs 9.38 lakh crore, or about 5 per cent of India's gross domestic period (GDP), are lying unsold across India as the real estate sector grapples with the worst-ever slowdown in the last many decades.
The value of the unsold inventory is the highest in the Rs 1-2 crore bracket, where 1.28 lakh units valued at Rs 1.8 lakh crore are awaiting buyers, according to data from real estate research and consultancy firm Liases Foras.
This is followed by 2.15 lakh units in the Rs 60 lakh to Rs 1 crore bracket with houses valued at Rs 1.70 lakh crore. The average ticket size of houses in this category is Rs 79 lakh. Unsold inventory includes under construction as well as ready-to-move-in houses.
"This (Rs 9.38 lakh crore) is the potential of saleable houses. But, the sales are just about one-third of what can be actually sold. Efficient markets maintain 12 to 15 months inventory," Pankaj Kapoor, founder and MD of Liases Foras told Business Today.
Current pan-India inventory level is 42 months, implying it will take more than three years to liquidate the unsold housing stock in the country. But, at a city level, the inventory overhang is as high as 80 months in Kochi, 59 months in Jaipur, 55 months in Lucknow and 72 months in Chennai. So, it will take between five and seven years for developers in these cities to get rid of the present housing stock.
"The majority of these units are under construction. To sell them, developers need to give a minimum 20 per cent discount. Then the housing market can gallop. And if it does, it will give a huge fillip to the economy," Kapoor adds.
The value of this inventory at Rs 9.38 lakh crore is more than the gross state domestic product (GSDP) of most states including Kerala, Haryana, Madhya Pradesh, Andhra Pradesh, and is almost double the GSDP of Bihar (Rs 5.7 lakh crore for 2019-20).