From 1st March 2021 to 24th March 2021, Mumbai recorded property registration of 12,696 units at a daily rate of 529 units, which is nearly 4.3 times higher than the daily rate of registration recorded at 123 units in March 2020.
Mumbai has recorded a historic surge in property registrations driven by home sales in the last month of the lower stamp duty window that began on 1st September 2020 and closes on 31st March 2021. The euphoria amongst homebuyers has grown stronger despite the 1 percentage point or 100 bps increase in stamp duty rates effective from 1st January 2021, according to Knight Frank India.
From 1st March 2021 to 24th March 2021, Mumbai recorded property registration of 12,696 units at a daily rate of 529 units, which is nearly 4.3 times higher than the daily rate of registration recorded at 123 units in March 2020. The sales particularly peaked in the last few days of the month with daily rate of new registrations increasing to 707 units between March 15 and March 24, 2020. At the current pace, the month of March 2021 can witness sales upwards of 17,000 units.
In December 2020 – the closing month for the first phase of reduced stamp duty, there was a stupendous increase in registrations in the last few days of the month as homebuyers rushed to make the most of the lower stamp duty window of 2%. From December 1, 2020 to December 25, 2020, the daily average of number of units getting registered in the month was at 585 units. This daily average of registrations nearly doubled at 1019 units in the last week between December 27 and December 30, 2020. Knight Frank India expects similar trend to play out in March 2021 as well.
From 1st September 2020 till March 24, 2021, the total revenue from apartments sales realized by the city exchequer has been over Rs 2,578 crore. When compared to the period before the stamp duty cut, i.e January 2020 to August 2020, the government had collected Rs 1,756 crore. This can be seen as a clear indication of the strong impact the stamp duty registrations have had on the revenues.
The reduction in stamp duty has created beeline for purchase of homes outside registration offices with Mumbai witnessing historically strong sales. Homes sales have continuously risen month on month in each window. Between the period from September 01, 2020 – March 24, 2021, Mumbai recorded registration of 75,688 units with numbers growing incrementally month on month in both windows.
The sales in March 2021 grew 234% YoY over the same month last year, registering the highest YoY growth in the months after the stamp duty cut. While March 2020 noted registrations of 3,798 units, March 2021 saw 12,696 units being registered.
Source: Maharashtra Govt- Dept. of Registrations and Stamps (IGR); Knight Frank India Research
As a direct result of the pandemic experience, home buying has improved. 2019 saw total sales of 67,863 units, whereas registrations in 2020 have come comfortably close to last year’s level at 65,272 units. Registrations in the first 3 months of 20212 have almost reached the halfway mark of full year 2019 and 2020 at 33,280 units.
The value of apartments sold in the Jan-March 2021 period added to Rs 39,880 crore. Since the reduction of stamp duty rates from September 2021, apartments worth Rs 1,08,967 crore (1.07 lakh crore) have been sold. Total value of all apartments sold in full year 2020 was estimated to be around Rs 1,00,245 crore or (Rs 1 lakh crore) surpassing the 2019 mark of Rs 90,769 crore.
The implied flat value (average price of apartment) sold has come down in the months following 1 percentage point increase in stamp duty rate, as most of the high-ticket size apartment purchase happened before the closure of the lowest 2% stamp duty window, which ended in December 2020. The implied flat value had reached Rs 1.72 crore (or Rs 17.2 million) in December 2020 and dropped to below Rs 1 crore during January 2021 and gradually rose to Rs 1.41 crore in March 2021 as the momentum extended to the mid segment also during this window.
Commenting on the same, Shishir Baijal, Chairman & Managing Director, Knight Frank India, said, “The reduction in stamp duty rate has helped mitigate the pain in the long-beleaguered real estate sector of Mumbai. As expected, with the revival of the economy, the sales momentum grew stronger in Q1 2021 and the euphoria amongst homebuyers continued despite the 100-bps increase in stamp duty rates. A combination of lowest home loan rates, reduced house prices along with rebates and payment flexibility offered by developers, as well as increased household saving rates, have provided the right growth environment for the residential segment to grow.”
Shishir further added, “After several years of anguish, the real estate sector in Mumbai is making an attempt to stand on its feet. However, the rising number of cases in the country and the resultant lockdowns in some cities is threatening to jeopardise this arduous recovery path charted by the sector. It would be immensely helpful if the government extends the window of stamp duty reduction by a few more months till the sector can find its feet and start sprinting again.”