News | 31st June 2022
India’s biggest and most expensive property market of Mumbai has continued to set new benchmarks by recording the best July performance ever in terms of deal registrations and collection of stamp duty revenue by the state exchequer.
The country’s commercial capital has recorded strong real estate sales momentum with over 11,340 registrations, brushing aside the concerns of rising interest rates and housing prices putting a dent in the pace of growth.
The best performance in July ever saw registrations moving up 14% from June and rising 15% from a year ago. The state government’s revenue collection through stamp duty also rose 13% to nearly Rs 839 crore, showed data from inspector general of registration, Maharashtra, as on the last day of the month.
Strong consumer demand continues to drive the property sales in Mumbai. Post COVID, the revival in housing demand has sustained and facilitated a soft landing for the Mumbai real estate market though there has been an increase in home loan rates and additional 1% stamp duty… We expect the market demand to remain steady. However, further rate hike can add pressure on the property demand,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
According to him, developers remain cognizant of the changing affordability and are expected to plan for risk mitigation such as enabling fixed rate limited period loans, and other measures.
“Real estate is a good hedge against inflation. Given the current environment there is an obvious increased interest to own tangible assets including properties. This market cycle has led to robust sentiment amongst the homebuyers. Importantly, higher sales also translate into greater revenue for the state exchequer helping in holistic growth… I am certain the state government observes that supporting real estate business leads to growth across sectors,” said Boman Irani, President, CREDAI-MCHI.
He is of the view that the state government had implemented measures earlier to ease some pressure off of the consumers. While these reductions were moderate, yet the impact of these measures had a substantial impact on businesses.
The property registrations have crossed the 11,000-mark for the first time since April 2022 that marked the implementation of metro cess effectively increasing the stamp duty by 1%. However, most property buyers opted to file papers in March 2022 and register the same in April 2022 to evade the additional 1% metro cess.
This had led to strong property registration in the month of April 2022 as well. However, July has recorded robust sales despite maximum properties being registered and filed in July month itself, effectively most consumers registering their properties paid the additional stamp duty.
With the looming inflation pressures, the Reserve Bank of India has opted for a cumulative repo rate hike of 90 basis in May and June. Higher interest rates have effectively stretched the homebuyers’ affordability level. However, property registrations have maintained buoyancy.
Around 78% of all property sales registrations were for properties transacted in the same month. Even while 15% of properties registered in July 2022 were filed in March 2022 and around 7% of these deals were filed in June 2022, the home buying activity seemed unabated by the rise in stamp duty and home loan rates, Baijal added.
The share of homes ranging from 500-1000 sq ft accounts to half residential properties registered in July 2022. The share rose from 45% in June 2022 to 50% in July 2022. Compact homes continue to be the second preference with a share take up of 34% in July 2022. Homes ranging from 1000-2000 sq ft saw a share take up of 14% while the share of over 2,000 sqft homes remained unchanged in July 2022 at 2%.
Revenue collection in July surpassed the Rs 800-crore mark for the first time since March 2022. The daily sale rate stands at 378, best in the last three months.
Property registrations in July 2022 rose 15% from a year ago despite July 2021 being a strong period as the lockdown had just been lifted and it was benefiting from significant spill-over demand.
As the restrictions gradually eased since June 2021, developers facilitated customer site visits and closed transactions that couldn’t conclude due to the lockdown in the previous month, leading to a rush in registrations in July 2021. However, with the support of strong consumer sentiment July 2022 has performed strongly.