Mumbai has recorded a robust 67 percent year-on-year growth in home sales volume at 9,301 units in November 2020, thanks to the stamp duty cut and festive period of Diwali.
According to property consultant Knight Frank India, 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.
This strong growth of 17 percent MoM in November comes after a robust 42 percent MoM growth during October 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.
Source: Department of registrations and stamps, Government of Maharashtra, Knight Frank Research
A stamp duty cut of 300 bps 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, Knight Frank said.
In addition to the stamp duty cut, sales in November were also augmented by the auspicious period of Diwali and the reduction of 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.
“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,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
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.
However, the consultant also noted that even after the stamp duty cut in September, the state government’s revenue collections from stamp duty have increased to Rs 2,328 million in October and Rs 2,879 million in November as compared to Rs 1,764 million in August.
Commenting on the development, Dr Niranjan Hiranandani, National President, NAREDCO said that the real-estate sector has rebounded to a better level due to pent-up consumer demand in the backdrop of fence-sitters closing sales to reap the benefits of reduced stamp duty, renters converting into first-time homebuyers, lowest interest rates, low-risk weightage, loan up to 90 percent of home value up to 20 years, and CLSS scheme extended to first-time home buyers.
"Also, the NRI communities have skewed interest towards investing in the property asset class as the right time to invest at its best price available," Hiranandani added.
Ram Raheja, Director of S Raheja Realty believes that there was a sense of realization about real estate being one of the safest, secure and crisis-proof investment class amongst all the other asset classes.
Another developer, Krish Raveshia, CEO at Azlo Realty is of the view that the change in home-buying preference due to the pandemic with buyers preferring to reside in a bigger home to adapt to the work from home culture also boosted demand.
“The interest rate and liquidity are likely to be favourable in the short to medium term for business and investments as per the indication by the RBI. The stage is set for high growth for the Indian real estate sector with unlocking, and pick-up in economic activities. We expect high traction in sales to continue in 2021 with all factors in favour of growth,” Raveshia said.