Over 8 lakh housing units unsold; real estate sector at all time low: Economic Survey 2017-18

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The Hush Post: India’s real estate sector is at an all time low. The Economic Survey 2017-18 notes that change in market sentiment to attract more foreign direct Investment (FDI) would be required for reviving the sector which is right now in doldrums.

Thousands of empty housing units unsold in Mumbai.

Delhi, Chandigarh, Mumbai, Pune, Bengaluru and 19 more cities have ready but unsold inventory with no prospective buyers. More than eight lakh middle-class housing units (including HIGs and MIGs three-to-five bedroom flats) have been constructed but they are lying unsold in these cities. In Mumbai alone there are over three lakh unsold houses and the number is at 1.50 lakh in Delhi.

Only 58,000 residential units were sold in the first-half of 2017, new home sales fell to a five-year low of 101,850 units during this period. Sales in the first six months dipped by over 38 per cent when compared with the same period a year before, while unit launches and inaugurations fell by over 55 per cent during the same period.

The real estate share, including ownership of dwellings, accounted for 7.7 per cent in India’s gross value added in 2015-16. “The growth of this sector decelerated in the last three years from 7.5 per cent in 2013-14 to 6.6 per cent in 2014-15 and further to 4.4 per cent in 2015-16. Launching of residential housing colonies across top 14 cities of India during the first half of 2017 fell to the lowest in five years.

Admitting that the enforcement of the Real Estate (Regulation and Development) Act (RERA), as well as the Goods and Service Tax (GST) – both of which were brought in last year – have had an effect on the residential market, the survey said that it was just for a short period as these reforms helped in bringing down the unsold inventory levels from 888,373 units in April 2016 to about 807,903 units in October 2017.

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