New launches see decline in Q3 on back of escalating property prices

• Unsold housing stock declines 11% in Q3, 2023.
  
• Indian developers are strategically focusing on reducing older unsold inventory.
  
• With an 8% increase in absorption compared to the previous year, the market is showing resilience.
  

New property launches increased by 2% in tier one cities, reaching 97,871 units in July to September 2023, up from 96,408 units in the same period previous year. However, it's important to note that the quarter witnessed an 11% decrease in new launches when compared to Q2FY24 due to reduced demand stemming from higher property prices and mortgage rates.

Unsold stock declines

In the reported quarter, unsold housing stocks in Tier 1 cities in India decreased to 508,464 units, down from 526,497 units in Q3 2022, marking an 11% decline, according to research data by PropEquity, an online real estate data and analytics platform.

While Hyderabad saw a 6% increase in unsold stock among the country's top seven cities during the same period, Delhi-NCR region experienced a 7% drop in unsold stock in Q3 2023 compared to Q2 2023, with residential property sales maintaining their positive momentum post-pandemic.

Indian developers are strategically focusing on reducing older unsold inventory, leading to a decrease in unsold stocks, while also launching fewer new projects.

Key Market Indicators - Tier 1 Cities
Indicators	Q3 2022	Q2 2023	Q3 2023	Q-o-Q	Y-o-Y
New Launches	96,408	1,10,468	97,871	-11%	2%
Total Absorption	1,14,216	1,22,702	1,15,904	-6%	1%
Unsold stock	5,70,932	5,26,497	5,08,464	-3%	-11%

Source: PropEquity Research

Says Samir Jasuja, Founder & CEO of PropEquity, “Housing prices have been climbing in major Indian cities in the post-COVID years. While this upward trend in capital values is attracting investors to India's key real estate markets, there is reduction in unsold housing stock. However, due to appreciation in both prices and mortgage rates, housing demand is currently facing challenges. Going forward, if interest rates on home loans remain stable or even soften in the coming months, we anticipate an increase in housing demand."

However, bullish trend continues

The bullish trend in the real estate market, which began in 2022, has continued into 2023. An analysis of the first three quarters shows that new property launches in Tier 1 cities have remained consistent with 2022 levels. However, what stands out is an unprecedented surge in demand, projected to reach a decade-high of 5 lakhs units.

With an 8% increase in absorption compared to the previous year, the market's resilience is evident. As we approach the upcoming festive season in the next quarter, the real estate market is poised for a surge in new property launches.