Property sales registrations in Mumbai saw a sharp year-on-year rise of nearly 30% in November...
Property sales registrations in Mumbai saw a sharp year-on-year rise of nearly 30% in November, the highest increase in a single month in 2014, according to data sourced from Director General of Registrations. The rise was primarily on account of a lower base seen in November 2013, when the registrations had dipped to a five-year low.
Sales in residential segment, however, look grim. Property sales registrations fell 2.4% y-o-y in the January-November period, suggesting that buyer sentiment was yet to revive.
Analysts and consultants tracking real estate say buyers ablitity to shell money and the property prices are still not finding a common ground. “Affordability remains an issue. Despite price stabilisation in residential market, they still reign at a level which is not fitting most budgets. While a good economic scenario should lead to improvement in the individual income, it would take at least a year or so for that to happen,” says Sandipan Pal, vice-president (real estate), Motilal Oswal.
Mumbai recorded 55,777 sales registrations between January and November, against 57,171 registrations in the same period in 2013.
Concerns over lower GDP growth and an uncertain job environment had affected the customer sentiment over the last three years. Even in the last two quarters, no clear trend emerged. After registering its fastest growth in two-and-a-half years in June, when GDP grew 5.7%, the economy expanded only 5.3% in the September quarter as a slump in the manufacturing sector pulled down the growth.
Om Ahuja, CEO (residential services), JLL India, says affordability challenges continue to remain in Mumbai.
“There are a lot of fence sitters in the city who want to see more price correction in the market, which is why not much sales are happening,” said Ahuja. With a revision in the ready-reckoner rates, the property prices will pinch the buyers even more. The ready-reckoner rates for 2015 in Mumbai and suburbs (up to Dahisar in western suburbs and Mulund in eastern suburbs) show that rates have seen about 10% y-o-y increase on an average. The fresh round of rate hikes will have a dual impact of increasing outgo on fungible FSI for developers, which they will pass on to buyers, and will also lead to a hike in stamp duty charges for buyers, Adhidev Chattopadhyay, analyst with institutional research of HDFC Securities notes in a January 2015 report.
He says that buyers who currently pay a stamp duty of around 5% on the agreement value will need to shell out an additional 0.5-1% of agreement value. This will be in addition to the 10-11% of agreement value that buyers pay in form of multiple levies, and another 5-10% of the agreement value is paid to developers on possession for various amenities. “As a result, a buyer requires to pay around 20% of the agreement value through his/her own savings, as housing loans do not include these payments,” he says.