Chart below shows trends of housing unsold inventory in city of Bengaluru. Unsold inventory is defined as units launched for sale by developers and unsold in primary housing market only. Note that unsold inventory includes built + unsold units, semi-built
+ unsold units and recently launched + unsold units.
Although unsold inventory in Bengaluru has trebled from 27.000 units in June-2011 to 84,000 units in June 2015, at current absorption rate, it equates to 10 quarters inventory. With commercial leasing picking up in CY14-15, we expect this to be a leading indicator of a pick-up in housing demand (new jobs will lead to new housing demand).
Bengaluru has resisted any price rationalization thus far. We attribute this mainly to 1) affordability as majority of Bengaluru’s 2BHK houses are priced between US$100,000 – 125,000 per unit, 2) office leasing has picked up in Bengaluru which is a lead indicator
of a pick-up in housing demand, and 3) rising inventory shall keep price rise in check which in turn shall maintain the city’s affordability.
Bengaluru housing market is ahead of other Tier I cities in property cycle because 1) pick-up in commercial leasing is a lead indicator of pickup in housing demand, and 2) rising inventory shall keep price rise in check and maintain the city’s affordability.
