OREANDA-NEWS. Fitch Ratings says in a report published today that it expects Indian homebuilders' presales to improve by 5%-10% over 2016. However, deleveraging will be gradual because many companies introduced easy-payment schemes in the last 12-18 months that will delay cash payments from buyers.

Presales rose by 18% in the financial year ended 31 March 2015 (FY15) for the seven large homebuilders that Fitch has tracked in this report. Four of these companies continued to report strong presales in the six months to end-September 2015.

Fitch also expects inventory turnover to improve on a sector-wide basis in 2016, driven by more sales, and homebuilders limiting the launch of new projects to focus on selling and completing existing projects. Inventory turnover for the sample improved to 2.9 years in September 2015 from 3.8 years in March 2015, and a peak of 4.6 years in March 2013.

Residential property prices should remain resilient in 2016, supported by improving demand. Homebuilders have been reluctant to reduce prices, and have instead used easy-payment schemes to woo buyers. As a result, there has not been a major price correction in residential real estate since at least 2011, according to the residential price index published by the National Housing Bank of India. The average selling price for the sample of companies included in Fitch's report in 1HFY16 was 13% higher than in FY15, but primarily because the sales mix shifted to higher-end units.

The full report "2016 Outlook: Indian Homebuilders" is available at www.fitchratings.com.