Sales to sustain despite stamp duty reversal, say Mumbai realtors

Property developers in Mumbai, one of the largest property markets in the country, hit the jackpot in the past seven months with the cut in stamp duty on registration and they say sales will sustain despite the state government not extending the cut and banks ending special home loan rates.
 
To boost the real estate market, the Maharashtra government in August last year reduced stamp duty to 2 per cent from 5 per cent for property transactions till December 31, 2020, and to 3 per cent till March 31, 2021. The normal rate of 5 per cent was restored on April 1.
 
This was a breather for developers, who were struggling with sluggish demand since the first quarter of FY21 due to the pandemic and lockdown.
 
Properties worth Rs 1.2 trillion — in 80,700 deals — were registered, said Propstack, a property data analytics firm.
 
Growth in the value of properties registered was 1.4 times the number between September 2019 and March last year.
 
At Rs 875 crore, it was the highest ever stamp duty collection and the sales in March were the second-highest in Mumbai, it said. More than 17,700 houses were registered in March 2021. This was up 3.7 times on a yearly basis, it said.
 
“We have seen 50 per cent additional residential sales since the stamp duty cut,” said Niranjan Hiranandani, managing director, Hiranandani Communities.
 
Though Kamal Khetan, chairman of Sunetck Realty, said he could not put the increase in sales entirely down to the stamp duty cut, he added: “The cut has had a positive impact on sales and made prospective buyers buy houses.”

 
Other factors such as pent-up demand, low home loan rates, and developer discounts have helped home sales, experts said.
 
Banks such as ICICI Bank and Kotak Mahindra Bank came up with special home loan rates till March 31, 2021. ICICI Bank offered a rate of 6.7 per cent while Kotak Mahindra Bank gave 6.65 per cent.
 
“The stamp duty cut was a major trigger for increased home sales in the Mumbai Metropolitan Region (MMR), despite the pandemic. However, other factors like low home loans rates and developer discounts also added to it. Because of all these factors, the overall cost of acquiring property fell anywhere between 5 and 15 per cent in the MMR – very unusual in a chronically expensive market like this,” said Anuj Puri, chairman of Anarock Property Consultants.
 
According to Anarock, after the stamp duty cuts, the period between October 2020 and March 2021 saw an 18 per cent jump in sales (to around 38,950 units) against the same period in 2018-19 and 2019-20.
 
However, Mumbai developers say sales will sustain.
 
“Two per cent is a small amount for buyers. I don’t think it will weigh much on the buyer’s mind while making a decision,” said Khetan of Sunteck Realty.
 
Regarding banks ending their special rates on March 31, he said there were enough buyers in the market.
 
Pirojsha Godrej, chairman of Godrej Properties, in an interview last month, had said cuts were helpful and wise moves in drawing fence-sitters into action “but someone who is buying a home will not back out because the stamp duty is 2 per cent higher again. It may get some people to act sooner but I don’t think there is any concern”.
 
The Maharashtra government has announced a rebate of 1 per cent on stamp duty for women buyers.
 
“We have noted a steady increase in women homebuyers over the past few years, especially in urban centres. The 1 per cent cut will encourage more women to come forward and register properties. In Anarock’s recent consumer sentiment survey, 62 per cent of women respondents confirmed housing as their preferred asset class over others such as stocks, fixed deposits, and gold,” he said.