Reduction Of Stamp Duty Witness Maximum Impact In Mumbai As The Sales Jump By 67% Despite COVID-19 Reports

Home sales volume in Mumbai stood at 9,301 units in November 2020 registering a whopping 67 percent year-on-year (YoY) rise over same month last year, boosted by stamp duty cut and festive period of Diwali, separate analyses by two property consultants Knight Frank India and Propstack have shown.

This strong growth of 17 percent month-on-month (MoM) in November 2020 comes after a robust 42 percent MoM growth during October 2020 and massive 112 percent MoM growth during September 2020, when sales of residential property started to show an upward trend after months of COVID-19 induced slowdown, an analysis by Knight Frank India has said.

At 9,301 units registered in November 2020, the residential sector of Mumbai recorded the highest ever registrations in the month of November over the last 9 years. The registrations in November 2020 have jumped by 17 percent MoM and a massive 67 percent YoY.

The stamp duty cut of 300 bps (basis points) continues to propel residential sales in Mumbai. Most developers have offered to absorb the remaining 200 bps which is resulting in huge savings for the homebuyer.

In addition to the stamp duty cut, sales in November 2020 were also augmented by the auspicious period of Diwali and the reduction of the home loan rate to historic lows.

Other measures by developers such as deferred payment plans, indirect discounts and offers to negotiate on the final price of the apartment have helped entice homebuyers.

Due to the lockdown, many families have realised the need to have additional rooms in their apartments which created an entirely new demand for upgrade, which added to overall sales. Fence-sitters who have been actively scouting for properties over the past few years are also finding this the right time to purchase their dream homes.

Mumbai has witnessed a cumulative residential sale of 22,827 units after the stamp duty cut during September-November 2020. The monthly run rate in this period after the stamp duty cut is approximately 135 percent or 1.35 times the monthly average of 2019.

“Limited period stamp duty cut continues to remain the biggest catalyst for residential sales in Mumbai. The sales were also augmented by the festive period, lowest ever home loan rates and incentives extended by developers. The proactive step by the Maharashtra government has instilled confidence in the housing sector which had been faring low for the past few years. Improvement in the real estate sector will help recuperate economic growth and aid faster recovery from the crisis,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.

“The demand momentum in this market is likely to continue till the end of the year buoyed by the low stamp duty regime. As income streams are coming back to normal, we believe that more buyers will come to the market before the end of the financial year to make most of this opportune time to buy their dream homes,” he said.

Another analysis by Propstack noted that registrations in November 2019 in Mumbai stood at 5,574, in December they were at 6,433, in January 2020 the number touched 6,150, in February 2020 they stood at 5,927 and went down to 3,798 in March post the lockdown. The number was zero in April, touched 207 in May after the registration offices reopened, 1,839 in June, 2,662 in July and August. This number started inching up at the onset of the festive season. It was at 5,597 in the month of September, 7,929 in the month of October and 9,301 in the month of November post-Diwali.

The analysis also noted that the stamp duty cuts led to lower stamp duty collections. Last November, the total collections stood at Rs 429 crore and this year it is Rs 288 crore.

It also said that the home sales value was 67 percent higher than November 2019. Last November the value stood at Rs 8,576 crore and this year it is Rs 14, 395 crore. The average ticket size of units was around Rs 1.5 crore, the Propstack analysis said.

On August 26, the Maharashtra government decided to temporarily reduce stamp duty on housing units from 5 percent to 2 percent until December 31, 2020, to boost the stagnant real estate market hit by COVID-19. Stamp duty from January 1, 2021, until March 31, 2021, will be 3 percent. Later, the ready reckoner rates were hiked by 1.74 percent.

(Source: Moneycontrol)