Mumbai has continued its record-setting spree by scaling a new peak with the highest-ever monthly stamp duty collection at nearly Rs 1,131 crore in March.
The performance has surpassed the previous high of Rs 875 crore touched in March 2021, when homebuyers had taken advantage of lower stamp duty benefit.
The country’s commercial capital witnessed registration of over 16,152 residential deals in March, making it the third-highest performance ever, showed data from the Inspector General of Registration, Maharashtra. This registration number is up 98% from January, which itself was a 10-year record.
This is also the only time the number of registrations has surpassed 15,000-mark barring the exception of December 2020 and March 2021, which was attributed to the government’s stamp duty reduction benefit that was in force then.
Record-low interest rates, incentives and stable pricing is prompting robust response from homebuyers for nearly six quarters and now the fear of a price hike due to cost push or an upward revision in government’s rates including a 1% Metro cess and ready reckoner values has also pushed the sales velocity.
“The demand continues to be robust with strong conversion of enquiries into actual sales and this pick up in business is resulting in higher revenue for the government too. Today, construction costs are rising, further the Metro cess & a probable increase in ready reckoner rates leading to higher stamp duty may be a deterrent for purchases leading to disruption in this momentum,” said Boman Irani, president, CREDAI-MCHI, which has been requesting the state government to defer the proposed imposition of Metro cess for a period of at least one year, to April 1, 2023.
The registrations in March are around 9% and 17% lower than December 2020 and March 2021, respectively, when homebuyers had rushed to take advantage of lower stamp duty. However, the state exchequer has collected 30% and 66% higher revenue in March as against March 2021 and December 2020.
“Strong demand and a catalyst, such as the impending metro cess from April 1, 2022, have motivated buyers to hasten their purchase decision. It is heartening to see that the residential market in Mumbai has maintained its pace for a significant period after the demand stimulants have been withdrawn. We firmly believe the latent demand will remain strong, backed by low home loan rates and stable home prices,” said Shishir Baijal, CMD, Knight Frank India.
Baijal hopes the state government takes constructive measures to ensure buoyancy in the sector as the change in stamp duty structure as well as the rise in input costs and an upward trend in retail inflation can pose challenges for the sustenance of this demand especially from end users.
During the month, maximum registrations were in the price band of Rs 1-5 crore while in terms of apartment size, mid-sized homes ranging between 500-1,000 sq ft were the most preferred category. With 51% share western suburbs of the city continued to dominate housing sales in the city.
The daily average for property registrations was recorded at 510, highest in the last 12 months. The latter half of the month recorded a higher daily registration rate of 593 as compared to the daily registration rate of 415 recorded between March 1-15, 2022. This increase in momentum was due to an impending increase in associated costs of property transactions.
Additionally, increase in raw material cost due to the existing geopolitical pressure is also steering the consumer sentiment, which anticipates a cascading effect on prices.
The Mumbai property market has been buzzing with activity since the state government announced reduction in stamp duty rates in 2020 to kickstart the realty sector and other industries linked with it.
The reduced stamp duty had led to a surge in the number of transactions across segments including luxury, mid-income and affordable housing. While the lower stamp duty benefit window period ended in 2020, the property markets across key cities of Maharashtra are still witnessing robust activity.