COVID-19 second wave: Housing sales dip 58 per cent in top 7 cities

  

 Housing sales in top 7 cities in April-June quarter 2021 (in Units)

Cities	Q2 2021	Q1 2021	Q2 2020
NCR	3,470	8,790	2,100
MMR	7,400	20,350	3,620
Bengaluru	3,560	8,670	2,990
Pune	3,790	10,550	2,160
Hyderabad	3,240	4,400	660
Chennai	1,590	2,850	480
Kolkata	1,520	2,680	730
Total	24,570	58,290	12,740

Source: ANAROCK Research

 

The ferocious COVID-19 second wave has significantly slowed down the housing sales in the April to June quarter of 2021 compared to the January to March quarter of 2021 but top seven cities showed an 93 per cent increase over the April to June quarter of 2020, according to the latest report by Anarock Property Consultants released today.

Mumbai Metropolitan Region which had reported sales of 20,350 units in Q1 of 2021 – thanks to the 2 per cent stamp duty cut in Maharashtra – reported sales of just 7400 units in Q2 of 2021. However, compared to 3,620 units sold in Q2 of 2020, the sales were more than double. Pune sold 3,790 units in Q2 compared to 10,550 in Q1 of 2021 and just 2,160 in Q2 of 2020. Mumbai and Pune accounted for 46 per cent of the total sales of 24,570 units across top seven cities. The top 7 cities had sold 58,290 units in Q1 of 2021 indicating the extent of recovery from the 2020 national lockdown.

Meanwhile, despite localized lockdowns and restrictions due to the second wave, developers launched new projects (mostly digitally) and put approximately 36,260 units on the market across the top 7 cities. Hyderabad is the frontrunner in overall housing launches with approximately 8,850 units launched in Q2 2021  followed by MMR with 6,880 and Bengaluru with 6,690 units. The top 7 cities launched around 36,260 new units in Q2 2021 compared to 62,130 units in Q1 2021 - a decrease of 42 per cent Q-o-Q due to the COVID-19 second wave. In Q2 2020, a mere 1,400 units were launched across the top 7 cities.

Anuj Puri, Chairman, Anarock Property Consultants, said, “The second COVID-19 wave definitely impacted overall residential property market activity in the second quarter of this year when juxtaposed against the preceding quarter. However, compared to the corresponding period of 2020, the sector displayed remarkable resilience. To the backdrop of developers adopting technology in their businesses, there was a huge yearly jump in both new launches and sales. Importantly, the localized lockdowns and restrictions did not dent activity as much as the complete nation-wide lockdown last year.”

He observed that the listed developers increased their market share slightly compared to the smaller, unorganized developers during the second wave – from 40:60 earlier to 43:57 now. “Back in FY2017, the ratio was 17:83. The impact of the second wave was felt more intensely by smaller and unorganized players,” he said.

Puri said with downward curve of second wave, easing of restrictions across cities and vaccination drive gathering momentum, he expected residential housing demand to see steady growth in the next quarter. “The previously-noted structural shift in housing demand continues - many current homeowners seek to upgrade to larger homes and the previously purchase-averse millennials remain very active property buyers,” he said.

The slowing down of sales also led to a 2 per cent increase in unsold inventory in Q2 of 2021.  Unsold inventory increased from 6,41,860 units in Q1 2021 to approximately 6,53,540 units in Q2 2021.. However, the two major realty hotspots - MMR and NCR - saw their unsold stock decline by 6 per cent and 1 per cent respectively.

 

 

 

 

 

Maharashtra discontinues stamp duty rebate; developers disappointed

Mumbai Metropolitan Region developers expressed their disappointment after Maharashtra government refused to extend the ongoing 2 per cent stamp duty rebate on property registrations valid till March 31, 2021

Chief Minister Uddhav Thackeray, Deputy Chief Minister Ajit Pawar, and Revenue Minister Balasaheb Thorat met on Wednesday to review the decision. CREDAI MCHI, which represents over 1,800 developers from MMR, had submitted a memorandum to Thorat last week seeking an extension of the 2 per cent stamp duty cut by another 12 months as it would help not only the real estate sector, but provide impetus to the economic recovery since more than 250 allied industries are linked with the construction sector.

Though the government refused to extend the stamp duty rebate, it agreed to the developer’s demand to keep the Ready Reckoner rates unchanged for 2021-22. It also decided to continue to the 1 per cent stamp duty rebate for women property owners aimed at encouraging women to be co-owners in family property assets. The government resolution issued by the government laid down a condition that women who take the benefit of the stamp duty rebate cannot transfer the property to male co-owners for 15 years.   

Commenting on Maharashtra goverment's decision about non extension of reduced stamp duty and unchanged ready reckoner rates, Dr Niranjan Hiranandani - MD- Hiranandani Group and National President- National Real Estate Development Council (NAREDCO) said, "Maharashtra government has played a leadership role in rolling out revolutionary measures like stamp duty reduction to augment sluggish real estate market post-Covid pandemic crisis. The extension of this benefit would have played a catalytic role in keeping up the pace of sales and property registration momentum across the micro markets and different housing segments in the state.”

Hiranandani pointed out that the stamp duty rebate had also resulted in increased revenues for the government. “The proven data clearly reflected uptick in volume leading to increased state revenue in second half of FY20-21 and multiplier effect it draws on employment and GDP. Unchanged ready reckoner rates is good, but Industry expected reduction in ready reckoner rates to foster real estate transactions. Hence, NAREDCO requests the state government to kindly reconsider the decision, proving it to be a win-win situation for all." Last year, the Maha Vikas Aghadi government had reduced the ready reckoner rates marginally for Mumbai with little impact on market rates.

Reacting to the developments, Deepak Goradia, President, CREDAI MCHI said, “We are disappointed with the Maharashtra Government’s decision to not extend the stamp duty rebate beyond March 31. Given the current economic climate, the reduction in stamp duty charges not just galvanized homebuyer sentiments, but also enabled the industry to spearhead the state’s economic revival in the post-covid era as well. An extension would have ensured the sustenance of the sales momentum while providing the necessary support to one of the strongest economic pillars and employment generators in the country.”

Goradia said the industry would continue to look forward in continuing the dialogue with the government and make representations to convince the government to to resume the reduced 3 per cent stamp duty rates in the near future

“We are glad that the State Government decided on keeping the ready reckoner unchanged which reflects the market conditions more precisely. The move to provide a 1% stamp duty rebate to women homebuyers is also noteworthy and honours the crucial role and contribution of women towards homebuying,” he said.

The bold step by the Maharashtra government to cut stamp duty rates by 3 per cent till December 31, 2020, and by 2 per cent till March 31, 2021 had reignited the demand for homes that had touch its lowest point in April at the peak of the COVID-19 national lockdown. Maharashtra’s policy initiative was followed by neighbouring Karnataka too. Most developers were in favour of the government continuing with the stamp duty rebate.

Rohit Poddar, Managing Director, Poddar Housing and Development Ltd said “The stamp duty reduction has spurred the sales and registration in Maharashtra to an all-time high, assisting the government in generating more revenue than the actual rates would have yielded. To sustain the momentum, it is essential for the government to extend the stamp duty reduction till March 2022 which in turn would help in generating even more revenue while de-stressing the real estate sector, thereby bringing the economy back on the growth track at high pace.”

Pritam Chivukula, Co-Founder & Director, Tridhaatu Realty and Secretary, CREDAI MCHI said "The State Government's decision to discontinue the stamp duty benefit will be a huge distress for the homebuyers who would have decided to buy their dream home but couldn't do so because of the severe impact of the pandemic. We had requested the Government to extend the stamp duty benefit for atleast a year so that more and more buyers could fulfill their wish of buying their home. We will continue to urge the Government to reconsider their decision and extend the stamp duty benefit further in interest of the homebuyers."

According to international property consultants Knight Frank India, after the stamp duty rebate was announced on August 26, the property registrations have grown incrementally month on month with a staggering 75,688 units registered between September 1, 2020 and March 24, 2021. Home sales achieved its highest ever mark in December 2020 with 19,581 units registered, and a 111 per cent increase over December 2019 registrations. In the run-up to March 31 deadline, the Inspector General of Registrations had clocked nearly 17,000 registrations in March, an increase of 234 per cent over March 2020.  

The Knight Frank India report also pointed out that from September 1, 2020 till March last week, the city exchequer had collected Rs 2578 crore in revenue from apartment sales which was a substantial increase over Rs 1756 crore worth revenue collected between January to August 2020 period.  

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.” 

MMR developers want stamp duty rebate to continue for one year

Mumbai developers, who tasted the impetus their home sales received after the 3 per cent stamp duty cut, have demanded that Maharashtra government extend the rebate ending on March 31, 2021 by another 12 months.

CREDAI-MCHI, which represents over 1,800 developers in Mumbai Metropolitan Region, made this demand in a letter handed to Maharashtra revenue minister and Congress leader Balasaheb Thorat recently.

The letter pointed out that the stamp duty rebate had not only substantially improved home buyer sentiments and property registrations since August 2020, but also increased the tax collections for the state due to high volume of home sales and contributed to job creation. The stamp duty was cut from 5 per cent to 2 per cent from Sept 1 till December 31, 2020, and then increased to 3 per cent from January 1 to March 31, 2021. The rebate has created positive cascading effect enabling the real estate industry to led the revival of the COVID-19 pandemic impacted economy, the letter said.

Acknowledging the support of the government in this recovery, CREDAI-MCHI said extension of the rebate till March 31, 2022 will further help sustain sales momentum that has led to record breaking property registrations and help the recovery.

Deepak Goradia, President, CREDAI MCHI, lauded the decisive and forward looking approach taken by the revenue minister. “We have requested the Maharashtra government to grant an extension of the stamp duty rebate for another 12 months to sustain the momentum and continuing the positive cycle of investment.” He said over 250 ancillary industries are directly and indirectly dependent on the industry and such a rebate would lead to further job creation and overall economic revival.

After the 3 per cent stamp duty cut was implemented, the property registrations shot up gradually to record breaking levels.   September 2020 witnessed registration of 5,597 properties, followed by 7,929 registrations in October, 9,301 registrations in November, and 19,584 registrations in December. While stamp duty increased by 1 per cent from January 1, the sales momentum continued with January logging 10,412 registration and February clocking 10,170 registations, according to the Inspector Generation of Registrations data.

The total value of properties sold also increased to never-before levels with September (Rs 9,025 crore), October (Rs 11,640 crore), November (Rs 14,395 crore) December (Rs 34,025 crore), January (Rs 10,170 crore) and February (Rs 11,745 crore), according to a Propstack report. Multiple factors including pent-up demand, lowest home loan rates, substantial savings in stamp duty for higher priced inventory, and discounts offered by developers contributed to the sales momentum.

 

MMR housing sales grow 33 per cent year on year in Jan 2021: Report

 The Mumbai Metropolitan Region (MMR) has witnessed 33 per cent year-on-year growth in housing sales in January 2021, with all micro-markets in the region continuing the sales momentum despite a 1 per cent increase in stamp duty, indicated a joint report by CREDAI MCHI and CRE Matrix released today.

CREDAI MCHI, which represents over 1,800 developers in MMR region, has now tied up with analytics firm CRE Matrix to publish monthly research reports tracking property sales in MMR. CREDAI MCHI President Deepak Goradia released the first edition of “MMR Property Tracker” which analysed the trends in eight key housing micro markets in MMR.

Giving in to the persistent demand of Mumbai developers, Maharashtra government had on August 26, 2020 announced a 3 per cent cut in stamp duty on property sales till December 31, 2020, and a 2 per cent cut in duty between January 1 and March 31, 2021. Driven by the substantial 3 per cent cut, December 2020 had registered record property sales in MMR realty market.

MMR Property Tracker said a total of 1,38,728 housing units valued at Rs 96,956 crore were registered in MMR from September 2020 to January 2021. The property sale registrations bottomed out from the peak of 48,624 registrations in December 2020 to 28,366 units registered in January 2021, but they were higher than 25,640 units registered in November. Compared to average 12,000 units sold in pre-COVID era in January each year, January 2021 witnessed sales of 18,839 units  

The effect of year-end discounts in December 2020 was carried forward to January 2021 as well as the month witnessed sales better than the months of Sep, Oct and Nov’20. The value of registrations in December 2020 stood at INR 36,772 Cr, which is 162% more than the average of previous three  months.  The value of registrations in January 2021 stood at Rs  19,099 Cr, which is 36% higher than the average registration value for Sept-Nov 2020 period,” the report said.

Key findings of MMR Property Tracker:

- Central Business District (CBD) Mumbai, one of the most expensive housing markets in India which has been struggling since almost half a decade, witnessed renewed enthusiasm from the HNI’s, as they opened their wallets to acquire properties, with 48% y-o-y growth in units sold in January 2021, with an average ticket size of Rs. 1.6 crore

- In Central Mumbai, the period from September 2020 to December 2020 showed a hockey-stick like increase in value of units registered, which truly captures the positive effect of stamp duty reduction taken by the state govt. Also, the value of sales in January 2021 which stood at Rs 2,173 Cr. was almost twice the monthly average of value of units sold in previous 3 years.

- In Central Suburbs, the value of sales in January 2021 which stood at ₹ 1,069 Cr was a substantial 71% more than the monthly average of value of units sold in previous 3 years, with an average ticket size of Rs 2.1 crore

- Western Suburbs and Eastern Suburbs witnessed 58% and 71% y-o-y growth in sales with an average ticket size of Rs 1.1 crore. This sales momentum is expected to continue further as pandemic effect is slowing down and fence-sitters are now going ahead and taking the property investment plunge.

- Across Thane, 30% more units were sold as compared to January 2020, with an average ticket size of 41 lacs. Raigad, largely known to be an affordable housing market, oversaw a y-o-y growth of 23% in housing sales. 

CREDAI MCHI President, Deepak Goradia, shares his comments “The past few months have re-laid the foundation of the Real Estate sector not just in MMR but the entire state of Maharashtra, largely owing to the progressive and decisive measures taken by the State Government to galvanize the sector in the post pandemic era. This joint report with CRE Matrix is a testament to the improving homebuying sentiments in MMR with the region witnessing an overall y-o-y growth of 33% in housing sales in January. Homebuyers, at the back of Covid – 19, have also fully comprehended the importance of owning a house and have been registering interest owing to a number of favourable buying factors. We expect this strong tide to continue till March and hope to sustain this momentum beyond March as well.”

 

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