New home launches continue to lag sales, prices remain buoyant

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Updated – May 25, 2024 at 05:29 PM.

In 2024, so far, there has been a 15% fall in launches, compared to the same period a year ago, while sales have risen 17%

New housing supply continued to lag demand in April as real estate developers slowed down the launch momentum resulting in a 10 per cent fall in new launches (in terms of area) in the month in the top seven cities while sales rose 28 per cent.

The most fall in new housing supply was seen in Hyderabad (55 per cent), followed by Pune (24 per cent) and Bengaluru (20 per cent), data collated by Nuvama Research showed. There was just a 1 per cent rise from March.

In 2024 so far there has been a 15 per cent fall in launches, compared to the same period a year ago, while sales have risen 17 per cent.

The supply-demand imbalance has resulted in buoyant home prices with a 5-40 per cent increase across the seven cities.

Demand versus supply

The demand and supply scenario is not uniform across the country, with some cities bucking the all-India trend.

In April new launches rose by about a fourth on year in the Mumbai Metropolitan Region, buoyed by redevelopment projects, by 71 per cent in the National Capital Region and 451 per cent in Chennai, where launches also doubled on month. Supply fell 7 per cent on month in NCR and 14 per cent in Pune.

In Kolkata launches were half of that in March and were down 10 per cent on year.

In 2024 to date with the exception of Chennai and Kolkata, all other cities saw a fall in launches while in Bengaluru and NCR it was flat.

There are two main reasons for the slow launch trajectory. With the Real Estate Regulatory Authority flexing its muscles in the respective states and demanding strict adherence to rules, getting approvals for projects is taking longer than before.

Real estate developers, with the shadow of a 10-year downturn prior to the pandemic still fresh in their memory, are calibrating their launches so that they are not stuck with excess inventory.

The demand is, however, robust across all cities, the growth ranging from 9 to 81 per cent in April.

Kolkata saw the most rise in sales at 81 per cent in April, followed by MMR at 57 per cent and NCR at 31 per cent. The lowest growth was in Hyderabad at 9 per cent.

Year to date, barring NCR and Chennai, all other cities have seen robust sales ranging from 4 to 43 per cent.

In terms of share of launches in April, the most number was in MMR, followed by NCR, Pune, and Hyderabad.

Price and inventory

Prices rose the most in NCR at 40 per cent in April, 15 per cent in Bengaluru and 7 per cent in MMR.

In many places across the country, prices had stagnated prior to the pandemic and the current price rise is seen as catch-up and also a function of the demand for residences.

Unsold inventory fell 7 per cent in April across India with MMR and Pune seeing the most fall. In Chennai, Hyderabad and Kolkata, inventory saw a rise.

The inventory is now at 15 months to sell compared to 20 months a year ago.

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