Home / Market / Mark-to-market /  Housing inventory dips

Demonetisation and the Real Estate (Regulation and Development) Act, 2016, (RERA) can potentially transform India’s housing industry, bringing in more transparency and accountability.

The residential housing market has suffered due to high unsold inventory for many years. Demonetisation and RERA had added to short-term uncertainty, but the market appears to be recovering.

Sales have risen in the first half of 2017, after a decline in the preceding six-month period, according to data from Knight Frank Research. Still, half-yearly sales are not back at their pre-demonetisation level.

On the brighter side, inventory levels are slowly contracting. Inventory levels are down to a reasonable level of five months of sales. The pace of new launches has dropped sharply since 2015. It is likely to ease further due to stiff compliance norms under RERA. If customers who had deferred purchases till there was clarity on RERA decide to buy, that could help sales growth. This could help absorb existing inventory over time.

But, there are pockets such as the National Capital Region, which are still carrying a high stock of unsold residential units. These pockets may take longer than the rest of the country to recover from the burden placed by high inventory on prices.

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