MUMBAI: The stagnant property market has led to the highest ever unsold stock of 815 million sq ft of residential space across six cities at the end of the September quarter this year, said a Liases Foras report released on Wednesday.
Cumulative sales were down 25% from the previous quarter, making it the lowest since 2009. The real estate research firm said investors have moved out of the property market and are pumping their money into equities, which is giving higher returns.
"This is the highest ever unsold inventory in the history of India's residential market. Prices have peaked not only in Mumbai, but across the country," said Pankaj Kapoor, managing director of Liases Foras. Last year, the unsold stock was 711 million sq ft. These ready but vacant flats could take as much as four years to sell. The regions surveyed in the report include the Mumbai Metropolitan Region (MMR), the National Capital Region (NCR), Bangalore, Hyderabad, Chennai and Pune. They contribute around 70% of the total apartments built in India.
In MMR, sales declined by 9.2% (in terms of square feet) in the July-September quarter as compared to the April-June 2014 period. The steepest decline was in Chennai (46%), Bangalore (43%) and NCR (34%). The average weighted price of an apartment in Mumbai is Rs 20,279 per sq ft while in MMR it is Rs 13,186.
"Investors are deserting the market because prices have peaked and they do not see property rates increasing now," said Kapoor, adding that the all-India market has never been so depressed. "Neither will end users buy because they find prices unaffordable," he added.
The average price increase in the six centres was just 1%. In Greater Mumbai, the number of apartments that came into the market this quarter (3,589) was 53% more that the previous quarter. But sales declined by 6% in this period.
In NCR, which has been badly affected, 62% of the residential supply is in uninhabitable places without proper infrastructure. The report also said 36% of sales happened in the cost bracket of Rs 50 lakh to Rs 1 crore. The demand for 2BHKs and 3BHKs was 36% and 32% respectively.