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With the burden easing on real estate developers in Hyderabad, residential property sales in the city rose by 76% in the third quarter of 2020. The unsold inventory too, shrunk slightly in this quarter, which is another positive news for the industry. In the previous quarter, property sales had plummeted sharply due to COVID-19 and the lockdown.
This growth in sales was recorded in a survey carried out across several major cities. Chennai showed the highest growth in residential sales. Hyderabad was at the second place, with 76% growth. Kolkata and Bangalore, two other major real estate markets, displayed a decline in residential property sales. The situation is therefore varying greatly across the country.
Before July 2020, 4,59,378 properties were listed in the unsold inventory across the seven major real estate markets in India. These included the MMR, Delhi NCR, Kolkata, Hyderabad, Bangalore, Pune and Chennai. At the end of the third quarter of 2020, the unsold inventory consisted of 4,57,427 properties. Evidently, the number of property sales has exceeded the number of property launches in this quarter.
The decline in the unsold inventory is certainly a good sign. In the last few years, the unsold inventory had been growing due to lack of sales compared to project launches. While the developers continued to launch new properties hoping that demand in the market would rise, the real estate sector went into an economic slowdown where sales decreased considerably.
The real estate sector in India had already been suffering from a liquidity crisis and a credit crunch in recent years. Several reforms which had been introduced in order to ensure long-term benefits caused side-effects, like a fall in the purchasing power of potential buyers. Naturally, this caused property sales to fall. it was around this time that the NBFC crisis arose too, making it hard for the developers to obtain financing from banks or non-banking organisations. Ultimately, several projects got stuck due to lack of funds, which led to a growing inventory of unsold homes.
While the scenario started to improve in the first quarter of 2020 with property sales getting a gradual boost, the lockdown imposed in the last week of March posed a new problem. However, the real estate sector in Hyderabad is already on this path to revival, with the city recording 40% of the new launches in India in the third quarter.
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