Home Sales Rebound In A Buyer’s Market This Festive Season
Sunil Chikane, 55, was scouting for a bigger home for nearly three years. He bought one last month in Navi Mumbai as the pandemic rages, decimating consumption.
For Chikane, who bought a three-bedroom apartment in the upcoming Dronagiri area of Mumbai’s satellite city, the recent cut in taxes to revive demand was the lure. “The stamp duty reduction was one of the major factors that helped me make this decision,” he said. “I was able to save around Rs 5 lakh due to the cut.”
Homebuyers are taking benefit of record-low interest rates, relief in statutory levies and discounts by developers in Mumbai, India’s financial hub, helping real estate demand recover after the Covid-19 lockdown and migration of construction workers crippled the sector. According to data by PropStack, sales registrations are at 90% of the pre-Covid levels in the city. That’s a relief for the sector saddled with unsold inventory and stressed projects even before the pandemic.
Innovative deals and discounts by developers coincide with unprecedentedly low home loan interest rates and the Maharashtra State government’s limited-period stamp duty incentive—2% up to December 2020 and 3% between January and March 2021, said Anuj Puri, chairman, Anarock Property Consultants. “The overall financial benefit amounts to a reduction of anywhere between 7-15% on the total property cost.”
Prior to the cut stamp duty was levied at 5%.
Offers from developers include refundable booking amounts, statutory fee waiver, cashback, easy payment structuring, and freebies, said Ashok Mohanani, president at developer’s lobby Naredco-Maharashtra. “The unsold inventory in MMR is expected come down a great extent.”
Not just Mumbai, sales are likely to rise across top metros month-on-month. According to the Anarock Research, the top seven cities are estimated to cumulatively see a 35% jump in housing sales in the ongoing festive quarter (October-December) compared with the preceding three months.
Measures announced by the central and state governments to revive the economy and demand and record low policy rates maintained by the Reserve Bank of India created a positive sentiment, according to Vikas Oberoi, chairman and managing director, Oberoi Realty Ltd. Maharashtra’s initiative of reducing stamp duty, he said, ensured that demand is restored to pre-Covid levels.
Developers say even higher priced apartments have seen an increase in sales. “What’s taken us by surprise is the surge in demand for homes in the luxury and super luxury segment,” said Aakash Ohri, senior executive director at DLF Home Developers Ltd. “With the rising high and ultra-high net worth individuals, and pent up demand, in the last three months we have witnessed a particular interest and renewed demand from prospective homebuyers looking for condos.”
The recovery extends to the secondary market. Investors are looking to exit and the execution risk is at its lowest, according to Pankaj Kapoor, managing director and founder at property consultant Liases Foras. Overall, he anticipates record sales volumes in the quarter ending December.
“For the first time in the last 15 years this has been a buyers' market,” he said. “So far, the market has always been the sellers’ market but now buyers can dictate the terms.”