Chennai's Unsold Housing Inventory Rises 8% in H2 2024: Market Resilience Amid Challenges
The Chennai housing market saw an 8% year-on-year increase in unsold inventory during the second half of 2024, hitting 16,729 units. This rise happens despite strong market fundamentals, as shown by a 4.3-quarters QTS (Quarters to Sell) metric, indicating ongoing buyer interest and sales pace despite economic pressures.
Market Dynamics: Between Inventory Growth and Resilience
The inventory increase might suggest temporary saturation, but Chennai's QTS metric is better than pre-pandemic levels, showing robust demand in key areas. Developers are launching projects in mid-range (₹40-80 lakh) and affordable housing (below ₹40 lakh) sectors, meeting stable middle-class demand.
Sustained Demand Drivers
- Stable absorption rates in economical tier-1 suburban areas balance out market stresses.
- Developer flexibility – Smaller projects and phased launches at affordable price are suited for mid-range income group.
- Government support for affordable housing (e.g., PMAY-U) boosts demand, though affordable inventory drops in other markets contrast with Chennai's recent uptick.
Challenges and Strategic Adjustments
Chennai's inventory overhang is less than many competitors:
| Metric | Chennai (H2 2024) | Kolkata (Q2 2024) | Ahmedabad (Q2 2024) |
|---|---|---|---|
| Unsold Units | 16,729 | 21,098 | Not disclosed |
| Inventory Overhang (Months) | ~24 | ~16 | Faster absorption |
| Luxury Inventory Growth | Stable | Not reported | – |
Developers face pricing pressure but avoid steep rate cuts, choosing structured payment plans and amenity-based differentiation. The move away from large-scale luxury projects matches slower demand in premium segments nationwide, where unsold luxury units rose 24% annually in early 2024.
Outlook: Prudent Recovery Expectations
Chennai’s residential market is expected to stabilise in Q1 2025, with the QTS metric serving as a key indicator of buyer sentiment. Key watchpoints include:
- Monitoring inventory vs. demand-driven launches
- Diversifying regional demand beyond core IT hubs
- Interest rate cycles affecting pricing power
While short-term inventory changes show market volatility, Chennai’s focus on affordable and mid-segment housing sets it up to benefit from ongoing urbanisation trends, albeit with more moderate growth compared to Western metros.