Knight Frank India in its report released on Wednesday estimates that home sales volume in Mumbai recorded at 9,301 units in November 2020 registering a whopping 67% year-on-year (YoY) rise over the same month last year boosted by stamp duty cut and festive period of Diwali. This strong growth of 17% month-on-month (MoM) in November 2020 comes after a robust 42% month on month (MoM) growth during October 2020 and massive 112% MoM growth during September 2020, when sales of residential property started to show an upward trend after months of COVID-19 induced slowdown.
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% MoM and massive 67% (YoY).
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% or 1.35 times the monthly average of 2019.
According to Knight Frank India, 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 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. Due to the lockdown many families have realised the need to have additional rooms in their apartment 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.
‘’It is important to note that even after the stamp duty cut in Sep 2020, the State Government’s revenue collections from stamp duty have increased to INR 2,328 million in Oct 2020 and 2,879 million in November 2020 and compared to INR 1,764 million in Aug 2020. This shows that the boost to housing sales has more than compensated for lower duty and hence benefitted the State Government in terms of revenue collections,’’ says the report.
Knight Frank India CMD Shishir Baijal said that 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 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.
“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 opined.