Decline in Unsold Housing Inventory: A Positive Shift in NCR Real Estate
One of the most often used indicators of economic health and consumer sentiment in the real estate sector is unsold inventory. Delhi NCR in particular has been plagued with this issue due to unscrupulous practices by the industry’s stakeholders, speculation-driven growth, and oversupply, leading to often stagnation in the market. However, recent data from real estate consultants has shown a different and rather positive shift in the region’s market.
As per data, there has been a notable decline in unsold housing inventory in the Delhi NCR region, showing a remarkable decrease of a whopping 57% over the last five years. This paints an optimistic picture of the market’s health, one that depicts recovery and growth. Let us dig a bit deeper into this development and what it might mean for the market’s future.
Understanding the Decline:
Before delving into the decline and its potential ramifications, let us first understand the potential reasons beyond this shift. One of the major reasons that led to the decline is the gradual loosening of restrictions in the post-pandemic world, which has led to a noted revival of consumer confidence. Further, the vulnerabilities of global economics witnessed during the pandemic and the volatility of many asset classes have led to the emergence of trust in real estate as a stable asset class.
Another reason for the decline of unsold inventory is the agility and innovation with which many developers have recalibrated the housing landscape in accordance with changing customer demands. Therefore, many developers are now coming out with projects that are furnished with every possible luxury amenity while being conscious of their responsibility to the community and environment. Eco-luxury projects that are affordable are what consumers are drawn to today, and that is exactly what developers are bringing to the market. This alignment between supply and demand has contributed to the reduction in unsold inventory, particularly in cities like Gurgaon.
Regional Comparisons:
While the resurgence witnessed in the Delhi NCR housing market has been noteworthy, it must also be noted that it is not an isolated incident. While the decline in Delhi NCR has definitely been the highest, the housing markets of southern cities like Bangalore, Hyderabad, and Chennai have also witnessed an impressive decline of 11% during the same period. Mumbai Metropolitan Region (MMR), Pune, and Kolkata have also witnessed a decline, albeit at a varying and slower rate than the other cities mentioned.
Nonetheless, this decline has led to a resurgence in confidence amongst developers as well as increased demand for homes. A city in which this trend has been witnessed on a rather large scale is Millenium City, Gurgaon. Though the city currently stands out with the maximum unsold inventory—a colossal 33,336 units—it is key to notice the city has observed a 37% decline over the last 5 years. This showcases the resilience of the Gurgaon market and has instilled confidence amongst the buyers, further strengthening the region’s real estate potential.
However, the real success stories of Delhi NCR are the suburbs of Ghaziabad, Noida, and Greater Noida. The suburb of Noida has witnessed the largest reduction of unsold inventory, with a staggering 71% decline since 2018. This is followed by Ghaziabad and Greater Noida, both witnessing an impressive 70% reduction. This trend highlights how many people, especially the working class, are now more inclined to invest in suburban areas, away from the packed central hubs of the cities.
Controlled Supply Dynamics:
A key factor in keeping this positive momentum of reduced unsold inventory going is restraint when launching new projects and keeping supply additions under control. This change in approach to the residential real estate market is evidenced by the addition of new supply between Q1 2018 and Q1 2024, limited to 1.81 lakh units, ensuring more sustained growth and a balanced market.
Conclusion:
The decline in unsold inventory that Delhi NCR has witnessed is a testament to the resilience of the market and the confidence that consumers have in the region’s growth potential. The real estate landscape today is one characterised by resilience, stability, and sustained growth. Moving forward, to maintain this growth, collaboration between developers, policymakers, and financial institutions is the need of the hour. By focusing on fostering this ecosystem, Delhi NCR is right on track to be an opportune investment ecosystem for decades to come.
