Mumbai, Pune residential property sales in December Boost Real Estate Sector, highest in 5 years
December property sales in Greater Mumbai have broken a 5 year record for the month, Boost for Real Estate Sector.
At a time when the real estate industry is seen as industry is seen as struggling to recover from the lockdown, December property sales in Greater Mumbai have broken a five-year record for the month.
A pronounced revival in sales through the December quarter, particularly in Maharashtra’s two biggest cities, has helped cushion the impact of the lockdowns on India’s residential property market that appears to have bottomed out in the current cycle after having peaked six years ago.
A record 14,783 sales have been registered in December so far, according to latest data uploaded by the department of registration and stamps. Industry sources said most of these are apartment sales.
These are way more than double the sales registered in December 2019; data shows 6,433 sales in that month. “We have never seen so many sales in five years,” said a developer with projects in suburban Mumbai.
With the state government slashing stamp duty on sale of flats from 5% to 2%, starting September 1 till December 31, property transactions have shot up. The state’s revenue has decreased, though. For instance, although sales have been a record high, the state has so far collected Rs 494 crore between December 1 and 25. In December 2019, the total collection was Rs 542 crore. “We still have a week to go till the end of the month. Registrations and stamp duty collection figures will further increase till December 31,” said a market source.
To be sure, top seven property markets across the country have seen total home sales of 1.38 lakh units in 2020, an on-year decline of 47%. However, these top 7 cities saw robust sales of around 50,900 units in the fourth quarter on the back of good purchase offers and benign interest rates that helped the market claw back to more than 80% of the activity seen in the same period in 2019.
This year has been unprecedented due to Covid-19, causing all-round upheaval. However, the residential segment was quick to pick up momentum in the last two quarters of 2020 on the back of growing home-ownership sentiment catalyzed by the exigencies of the pandemic. This pent-up demand was further accelerated by the ongoing discounts and offers, the prevailing lowest-best home loan interest rates and limited-period stamp duty cuts in states such as Maharashtra.
”Mumbai Metropolitan Region (MMR) and Pune drove residential sales, with these two cities accounting for more than 53% of the total. For instance, Mumbai, the country’s biggest real estate market, continued its record-setting ride in December as homebuyers rushed to conclude deals in a ‘buyers’ market’.
The performance in December has already broken all the monthly records in just the first half, with deals set to close at records. “Most of the variables seem to have fallen in place. Genuine homebuyers who have been waiting on the sidelines have started to take decisions”.
Buyers’ sentiment has seen an upturn led by record-low home loan rates and various other enabling steps taken by the central and state governments. The real estate sector expect the momentum to continue.
Estimated value of 15k sold flats is ₹25k crore
Registration of residential sales in the financial capital rose 53% from a year earlier to 9,827 deals in the first 18 days of December, surpassing the number for the entire November, which also logged the highest in eight years. These numbers are 66% higher than the pre-pandemic month of February. According to property brokers, the uptrend in housing sales is visible across all the key markets as the pandemic has made buyers realize the need for bigger homes. While initially the preference was for ready properties, now the under-construction projects are also witnessing good traction.
We have seen this pentup demand cycle in the market. Reduction of 8% to 12% in prices compared with last year makes buyers eager to take decisions faster,” said a developer with projects in suburban Mumbai. He added that more than 85% of home buyers availed of loans as interest rates are at the lowest.
Reduced stamp duty has been a big motivator for the fence-sitters who were planning to buy a house in Mumbai. Besides, developers have offered good discounts and flexible payment plans to woo the customers during this time
Due to increased new launches across cities after unlock, unsold inventory declined by 2% on a yearly basis to 6.38 lakh units during the fourth quarter. However, in comparison to the peak levels of 2016, when unsold stock stood at around 7.91 lakh units in top markets, it has seen a significant 19% decline. New housing supply in 2020 declined by 46% against the preceding year to 1.28 lakh units. On the supply front, the top cities saw a 2% rise in launches at 52,820 units during the fourth quarter.
Mumbai developers have claimed brisk sales of flats priced up to Rs 2 crore since September when the stamp duty rate was slashed. From January 1 till March 2021, the rate will be increased from 2% to 3%.
Many builders are already absorbing the stamp duty cost and not charging it to the buyers.
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