The number of properties sold in Mumbai, India’s real estate capital, rose by 112 per cent in September from the previous month, according to figures released by the Maharashtra government.
According to official figures, 5,597 sale or conveyance deeds got registered with the state’s inspector general of registrations (IGR) in September as against 2,642 documents registered in August.
In another sign of green shoots of recovery appearing in the property market – among the worst hit by the prolonged lockdown – the figures also showed that the volume of registered sale transactions this September was 39 per cent higher than last September, which had seen registration of 4,032 documents.
Across the state, 1,19,834 properties were sold in September, which was also 46 per cent high than in August (82,100) and 49 per cent over last September (80,349).
Earlier, in a bid to revive the real estate economy, the Maharashtra government had cut the stamp duty payable on all sale transactions executed and registered between September 1, 2020 and December 31, 2020 by 3 per cent and by 2 per cent for transactions registered between January 1, 2021 and March 31, 2021.
Revenue Minister Balasaheb Thorat said that the stamp duty cut has had the desired impact. “The benefit has been passed on to the buyer. We have seen an uptick in sales since August 25. We are hopeful of the trend to continue,” he added.
In Mumbai, also seen as the country’s costliest real estate, the relief has brought down the stamp duty payable on a sale transaction from six per cent to three per cent for now while in some other parts of the state, it has dropped from seven per cent to four per cent.
A month later, it is evident that the government’s concession, which is estimated to set the state exchequer back by Rs 1,000 crore in estimated revenue, has given first sale transactions a much-needed boost.
This September, statistics show that the state netted a total revenue of Rs 181 crore through stamp and registration levies from sale transactions. Last September, corresponding collections were to the tune to Rs 348 crore.
After a complete shutdown in the first couple of months of the lockdown, construction activity has been gradually resuming operation in Maharashtra since June. But it was only after mid-July that the residential buying segment started witnessing some movement, officials said. The upward trend in the property sales has also positively impacted the home loan market.
According to government numbers, September saw 3,398 and 29,250 registrations of agreement or memorandums for the deposit of title deeds in Mumbai and Maharashtra, respectively. It is mandatory for all home loan borrowers to enter into such agreements with the lending institution. In August, the corresponding number of documents was 2,359 and 23,353, respectively.
Incidentally, the rental property market also depicted an upward trend. According to figures, Mumbai saw 3,515 more properties rented on leave and license basis in September as compared to the month earlier. The IGR registered 19,216 leave and license documents in September, which included 17,216 e-registration and 2,394 registration done at various registrar offices. In August, the total registrations done in this category were 16,095.
“As a matter of precaution several housing societies had disallowed their members from renting out flats in the first few months of the lockdown. It is only now that the market has opened up,” said Vinod Gupta, owner of Sai Siddhi Realty, a real estate brokering agency that deals in residential and commercial properties in south and central Mumbai.
With the rental housing market in almost a total shutdown mode previously, Gupta added that a price correction of up to Rs 4,000 to Rs 5,000 a month in rents for residential properties have been witnessed.
“As economic and commercial activity in south and central Mumbai picks pace, we expect the rental market to gain further momentum,” he said.
Stamp duty and property valuer Sunit Gupta, however, cautioned that the upward movement might be a temporary phase. “The lockdown has clobbered the economy and adversely hit per capita income. The additional sales witnessed in September can be attributed mostly to a pent-up demand from buyers. The concession in stamp duty has helped the trend as well. But it may not sustain over a longer period,” he said.
He added that “buying sentiment” is expected to remain muted in the near term with many suffering from pay cuts and job losses.
While the state government has indicated plans to halve construction premiums to help the property market further, Sunit said the government ought to have reduced property ready reckoner rates significantly to benefit first time buyers. “They (the government) missed a chance there,” he added.
Meanwhile, government sources said that the state Cabinet is expected to soon green light a proposal to reduce construction premiums, which has been recommended by the high-level committee headed by Housing Development Finance Corporation Chairman Deepak Parekh.
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