Mumbai property registrations see sharp recovery in October; up 36% YoY – ET RealEstate

Residential property sales in Mumbai, the country’s hottest property market, has registered a sharp recovery with an over 36% on-year jump in October led by the stamp duty reduction and discounts offered by realty developers.

In an indication of a robust revival from pre-Covid level, the registration of apartments rose 34% from levels witnessed in February, showed data from the office of the Inspector General of Registration Maharashtra. The October performance is the fourth highest monthly sales registration volume and value since April 2013.

“The registration numbers highlight that the combination of three factors – a discount of 5 to 15% by developers, stamp duty reduction by the state government and low interest rate regime is certainly giving a boost to sales this festive season,” said Sandeep Reddy, director, Propstack. Value of home sales in October rose 31% from a year ago to Rs 11,640 crore, while the growth from pre-Covid level seen in February stood at 33%.

“Sales activity has surpassed pre-Covid level and we are witnessing faster deal conversions owing to stamp duty reduction. Homebuyers’ response in the last few weeks can be attributed to the overall financial benefit worth 8-17% of the property cost. Festive sales will see further push from here,” said Rajan Bandelkar, MD, Raunak Group.

While the home sales activity in the country’s most expensive property market has recovered sharply from a year ago as well as pre-Covid levels, stamp duty collection has declined given the reduction in rates announced by the state government. In October, the stamp duty collection stood at Rs 233 crore as against Rs 438 crore in February and Rs 443 crore in October 2019. However, it has increased from last month’s collections of Rs 181 crore. In August, the government of Maharashtra had announced reduction in stamp duty on property registrations to 2% for transactions between September 1 and December 31 from 5% earlier.

The stamp duty will be 3% for agreements to be registered between January 1 and March end. The stamp duty reduction has not only helped converting pent up demand in mid-income and affordable segment, but has also promoted conclusion of several large-ticket transactions in the city and the trend is expected to pick up further during the ongoing festive season.

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Maharashtra’s stamp duty cut leads to 75% rise in home buying in Nagpur – ET RealEstate

NAGPUR: The stamp duty cut by state government has spurred realty transactions in the city. The move has halved the effective stamp duty rate levied on purchase of property to 3% in the city against 6% earlier.

The current rates are effective from September 1 to December 31, 2020. In September itself, there was a 75% increase in the number of sale deeds registered in the city compared to that in August. The data for October is yet to be complied but sources said that the trend was expected to continue.

Builders said there was a major jump in the mid to low priced housing segment, with many who had held up the buying quickly inking the deals.

The increase in registrations indicates the rise in property dealings. Stamp duty has to be paid along with registration and is levied over purchase of property.

As against 3,942 sale deeds registered in August, more than 6,500 were registered in September, a hike of 75%. The duty collection too has grown by over 13% in September over August figures. In September, Rs 40 crore was collected against Rs 35 crore in August, according to data shared by the registrar’s office here.

The collection, though, is still less than the monthly target. Due to the pandemic, the department has not been issued fresh targets for the fiscal. As it continues with the previous year’s targets, the achievement on monthly basis is lagging.

With yearly target of Rs 785 crore, the average monthly duty collection is expected to be in the range of Rs 65 to 60 crore. At Rs 40 crore, September collections are thus behind the target. This is due to the reduction in rate of duty, said officials.
Maharashtra's stamp duty cut leads to 75% rise in home buying in NagpurThe lockdown in March had brought down property transactions to negligible levels. Only eight deeds were registered in the month of April. In May, there was a jump and 841 documents were registered. In ,June it was over 3,900 and over 6,100 in July. It again fell to about 3,900 in August, the data revealed.

The total collection so far stands at over Rs 186 crore which is 23% of the target.

Builders said that the duty cut and other moves by the government had indeed spurred realty buying. Gaurav Agarwala, secretary of the Nagpur branch of Confederation of Real Estate Developers Association of India (CREDAI), said majority of the buying was happening in Rs 20 to 80 lakh segment. Apart from stamp duty, there are other factors too, he said.

“The interest rates on home loans are at a 20-year low at around 6.85%. Even developers are looking to sell properties at competitive rates. At present, persons with steady income like salaried class are looking to buy properties. Even the government subsidy on Pradhan Mantri Awas Yojana is available till March next year,” he said.

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Stamp duty cut in Maharashtra may do little to revive real estate demand: Ind-Ra – ET RealEstate

NEW DELHI: India Ratings and Research (Ind-Ra) believes that the proposed stamp duty reduction by Maharashtra government would do little to boost demand in the sluggish residential real estate market.

The sector has been facing a slowdown for the past few years which has been exacerbated by COVID-19 led nation-wide lockdown.

The residential real estate’s volume and price growth are closely integrated with the GDP growth rate. Given that India’s GDP growth rate has been sagging and is likely to witness historic lows in FY21, it is highly unlikely that temporary measures such as one-time reduction in stamp duty for a limited period will revive confidence in the real estate markets. Income slowdown amid levered households’ balance sheets may only intensify the slowdown in the residential real estate in the near term.

The two key residential real estate markets of Maharashtra – Mumbai Metropolitan Region (MMR) and Pune may react differently to this measure, given the structural difference between these two markets, said Ind-Ra.

MMR and Pune have seen a decline in weighted average prices (across ticket sizes) at a CAGR of 3% and 0.5%, respectively, while all India prices increased about 1% during FY16-FY20.

MMR particularly has almost 75% of its inventory in ticket size upwards of Rs 50 lakh and may thus require a little more than stamp duty reduction to encourage prospective buyers.

On the other hand, Pune has equal split between Rs 50 lakh and upwards and Rs 50 lakh and below ticket size; and thus, lower ticket sizes may still see some uptick, given that the capital values in that segment have remained more or less stable.

Thus, anticipation of a further decline in prices may offset the benefits offered by temporary reduction in stamp duty.

The state government had proposed to reduce stamp duty by 3% for the period 1 September to 31 December 2020, and thereafter to 2% between 1 January to 31 March 2021, from the present 5%, across Maharashtra.

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