Housing inventory overhang lowest in 5 years in Q1 2023

The housing inventory across India's top seven cities plunged to just 20 months in Q1 of 2023, from 42 months in Q1 of 2018, thus reaching the lowest in the last five years owing to the robust sales in the housing market, according to the latest report by ANAROCK.

Inventory measured in months indicates the number of months it will take for the current unsold housing stock on the market to sell at the current absorption rate. An inventory overhang of 18-24 months is normally considered healthy at any given period, the report says.

ANAROCK data shows that the inventory overhang in the top seven cities in the last five years was the highest by Q1 2020-end, at 55 months. The top seven cities are NCR (National Capital Region), MMR ( Mumbai Metropolitan Region), Bengaluru, Hyderabad, Pune, Chennai and Kolkata.

The cumulative unsold stock in the top seven cities saw a 12% decline in the last five years, from 7,13,400 units in Q1 of 2018 to approximately 6,26,750 units in Q1 of 2023.

Among the top seven cities, NCR witnessed the maximum 5-year inventory reduction by 43 months. The housing inventory in the NCR region stood at 23 months in the March quarter of 2023, as against 66 months from Q1 of 2018.

"Among the top 7 cities, NCR remained the frontrunner in reducing overall inventory overhang in the last five years – from 66 months in Q1 2018 to approximately 23 months in Q1 2023. This is the best the region has seen in the last five years. In fact, inventory overhang in NCR had peaked at 88 months in Q4 2020," says Anuj Puri, Chairman, ANAROCK Group.

In the Mumbai Metropolitan Region, the inventory overhang shrunk by 34 months during the period under review. The housing inventory in Mumbai Metropolitan Region attained an all-time low of 21 months in Q1 of 2023. Mumbai Metropolitan Region recorded the highest sales among the top cities, with approximately 34,690 units sold in Q1 of 2023, thus witnessing an increase of 182% against the same period in 2018.

According to the ANAROCK data, Bengaluru witnessed the lowest inventory overhang of 13 months among the top cities in Q1 of 2023. Hyderabad’s inventory overhang was reduced to 21 months in Q1 2023, from 23 months in Q1 2018. Pune’s inventory overhang stood at 20 months in Q1 of 2023 as against 40 months in the same period of 2018 and reached 43 months in Q1 of 2021. Chennai’s residential inventory overhang dropped from 36 months in Q1 of 2018 to 20 of months in Q1 of 2023. Kolkata's residential inventory overhang has dropped from 46 months in Q1 2018 to 20 months in Q1 of 2023. 

"In Q1 2023, the top 7 cities recorded all-time high sales of more than 1.14 lakh units. The quarter broke all records and breached the 1 lakh units mark for the first time. Strong homeownership sentiment, relatively lower home loan rates, strong momentum in luxury housing and the anticipation of further price hikes were major factors in boosting housing sales, bringing down the overall residential inventory overhang across the top cities," he adds.