Mumbai Home Sales See First Real Spike Since Stamp Duty Relief Ended
Home sales in Mumbai rebounded in June as the second wave of the pandemic waned and Maharashtra eased restrictions.
India's financial capital saw registration of 7,857 units in June, according to data shared by Knight Frank India Research. That's a 47% jump over May and more than a fourfold surge over a year earlier when India was still emerging from one of the world's strictest nationwide lockdowns.
“Even though the duration of lockdown in Mumbai (this time) was similar to last year, the pick-up post gradual easing of restrictions was sharper,” Knight Frank said in its report.
June sales, however, are lower than registrations between November and March when homebuyers rushed to take advantage of a lower stamp duty. Maharashtra had slashed the levy between to help the sector grappling with high unsold inventory and stalled projects even before the pandemic.
Some of those registrations may have also spilled over to June. The state in December gave homebuyers four more months to register a property to prevent crowding of registration offices. According to Knight Frank, those who bought homes till March 31 can register the property till July 31.
Still, 42% of registrations in June were new sales during the month itself, Knight Frank said. That compares with 7% in April and 29% in May.
At 3,300 units, fresh sales rose 348% over 710 units sold in April 2021 and more than double of 1,554 new units sold in May.
While the second wave of pandemic was more severe and lockdown duration as well as intensity was similar to the first time, rebound in property registration was stronger than last year, according to Shishir Baijal, chairman and managing director, Knight Frank India.
“The recovery indicates a fundamental shift in homebuyers’ behavior towards owning a house, an aspiration which had taken a backseat due to the ‘uberisation culture’ of recent years," Baijal said. "This shift in behavior was complemented by other factors such as lowest-ever home loan rates, discounts offered by developers, extended time spent indoors and demand for larger homes."
He expects the momentum to continue on improved pace of vaccination and economic revival. A demand stimulant from the government can ensure a sustainable recovery, he said.
Impact Of Full Stamp Duty
During the period when reduced stamp duty was applicable, sale of new homes worth more than Rs 1 crore accounted for more than 40% of the transactions, according to Knight Frank data. That, however, declined after the relief lapsed in March. The share of properties below Rs 1 crore has risen since then.
Knight Frank, however, said demand in the relatively affordable segment after restoration of full stamp duty should be seen as a positive indication. As the vaccination programme gains momentum and normalcy returns, the sales are expected to gain momentum, the report said.
Maharashtra announced a 1% rebate in stamp duty for women homebuyers from April. As a result, women bought 6.6% of new home sales in April, paying 4% levy. But their share fell to 1.7% in May before recovering to 4.7% in June, the report said.
Property registrations and stamp duty revenue may have marginally increased in June, largely due to the spill over effect from previous months, Deepak Goradia, president at developers' lobby Credai-MCHI, said in a statement. "The overall momentum has definitely been affected due to the decision to not extend the stamp duty rebate."