More than one-fourth of the total 5.2 lakh housing stocks being constructed in the National Capital Region (NCR) are unsold due to weak demand, according to property consultant Knight Frank.
The NCR market witnessed about 31 per cent decline in new home launches at 33,500 units during the second half of 2012-13 financial year compared to the year-ago period, while sales fell by 12 per cent to 33,200 units in the review period.
On housing prices, Knight Frank's latest report on the NCR residential market said that there has been a steady price appreciation in most of the micro-markets even though demand remained subdued in the NCR market. It attributed the rise in prices to increase in construction cost and investor demand.
"Nearly 5,20,000 residential units are under various stages of construction in the NCR market...The NCR residential market has an estimated 1,40,000 units of unsold inventory which is approximately 27 per cent of the units under construction," Knight Frank said in its report.
About 66 per cent of the unsold units are concentrated in Noida and Greater Noida due to the start of a number of big projects in these locations.
"Even though it is quite high, there is an improvement compared to early 2012 where both these markets (Noida and Greater Noida) together constituted nearly 78 per cent of the unsold units," it added.
The report also revealed that almost 50 per cent of housing stocks being constructed is expected to be ready for possession by the end of 2014. "Quite a number of projects that were launched in 2010 have seen execution delays pushing the completion dates to 2014 and early 2015."
The developers continue to cope with execution pressures as construction costs have risen, in turn requiring more funds to be diverted towards existing projects, the consultant observed.
"Overall the NCR residential market remained subdued with sluggish demand and lower project launches. Nearly 33,500 residential units were launched in H2 FY13, showing a dip of almost 31 per cent compared to H2 (second half) of FY 2012," the report said.
On sales, the consultant said that the "NCR residential market observed total absorption of 33,200 units in H2 FY13 showing a dip of about 12 per cent compared to H2 FY12".
Nearly 65 per cent of the absorption has been in the affordable and mid-segment housing.
On the outlook, Knight Frank said that NCR residential market shows a cautious outlook owing to the slowdown in both project launches and absorption.
"Developers are also facing a liquidity crunch due to limited access to both domestic and international funds leading to a slowdown in construction activity and project delays," it said.