Stamp duty cut gives traction to premium South Mumbai homes

 

                              Courtesy: Knight Frank India Research

 

Satish Nandgaonkar

After facing several years of stagnancy, the premium housing segment in Mumbai Metropolitan Region appears to have got good traction in the fourth quarter of 2020, indicated the half yearly report “India Real Estate: H2 2020” released by leading international property consultants Knight Frank India on Wednesday.

Mumbai Metropolitan Region clocked sales of 48,688 units in calendar 2020 out of which 30,042 were sold in the second half of the year. Out of this, 22,407 units were sold in the September-December quarter of the year as buyers took advantage of the prevailing market conditions -- a 3 per cent stamp duty cut till December 31, discounts offered by developers, lowest interest rates on home loans. MMR sales recorded a staggering 193 per cent increase over Q3 (7635 units).

The data from MMR micro-markets indicated that premium and mid-segment units in Central Mumbai (432 units), South Mumbai (287 units) and Western Suburbs (3854 units) witnessed exponential year-on-year growth in sales. Central Suburbs (2220 units), Navi Mumbai (1854) Peripheral central suburbs (6150) Peripheral western suburbs (4650), and Thane (2960) also witnessed a healthy growth.  

“As the absolute savings from stamp duty cut is higher in the higher ticket size segments, the relatively expensive markets of MMR and luxury segments languishing for the past few years witnessed a jump in sales. South Mumbai witnessed the highest growth in sales of 112% during H2 2020, followed by Central Mumbai at 106% and Western suburbs at 76% during the same period. As a result, 57% of apartments sold in H2 2020 were priced above Rs 50 lakh compared to 52% during H2 2019,” the report said.

The Knight Frank Research showed that for the first time since H2 of 2017 (when the sector was reeling under demonetization, RERA reforms), the sales number was higher than the number of new launches. In H2 of 2017, the new units launched stood at 7,490 units, while the number of units sold stood at 30,179 units. In 2018 and 2019, the number of units launched far outnumbered the number of units sold in the each 6 month block. In H1 of 2020 too, 23,399 units were launched and 18,646 were sold. However, in H2 of 2020, thanks to the Q4 which saw record sales, 26,904 units were launched, while 30,042 units were sold.

The average prices decreased by 3.2 per cent year on year. The average weighted price of Rs 7014 per sq ft in 2019 decreased to Rs 6787 per sq ft in 2020. The unsold inventory which had increased in H1 of 2020 from 1,45,301 to 1,50,054 declined to 1,46,916 units in H2.

The affordability index for Mumbai indicated that the affordability increased from 94 per cent in 2015 to 61 per cent in 2020. “It means that 94 of the income of a home buyer was going towards paying the home loan EMI in 2015 which has improved to 61 per cent in 2020,” said Rajani Sinha, Chief Economist and National Director – Research, Knight Frank India.