Housing demand in Mumbai witnesses a surge post-stamp duty cut

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The euphoria amongst the homebuyers in Mumbai was at its peak when the Maharashtra government had slashed the stamp duty. According to data by the Inspector General of Registration, Mumbai alone witnessed as many as 80,718 properties, translating to a growth of 114% between September 2020-March 2021.

Prashant Thakur, director & head – Research, ANAROCK Property Consultants says, “Despite the stamp duty cuts in this period, the state government collected almost the same volume of registrations revenue as it did last year in the same period. The total revenue collected stood at Rs 2,914 crore between September 2020 to March 2021 period, while it was Rs 2,958 crore in the corresponding period a year ago.”

He adds further that the increased sales volume aided by the stamp duty cut helped the government to avoid severe revenue loss. Adding to the reduction in stamp duty charges, low home loan rates, and attractive festive discounts also pushed the housing demand.

The Maharashtra government on August 26, 2020 had announced a stamp duty reduction on housing to 2% until December 31, 2020, which was earlier 5%. The stamp duty charges were 3% in Q1FY21. Adding to the relief, a 1% stamp duty cut was further announced on the occasion of Woman’s day if the house property is in name of the woman.

After March 31, Mumbai saw a significant decline in property registration numbers. Besides this, even the unabated second wave of Covid-19 and partial lockdowns are also contributing to lower housing demand.

Consumers are restricting themselves from buying a property because of the surge in virus cases. Restriction on interstate movement and calls to steel manufacturers and fabricators to allocate their oxygen supplies to the hospitals have put pressure on the supply chain.

Amid these challenges, Thakur says, “It is an apt time to consider such a move as the second wave has proved to be far more serious than the first one. Overall, the housing sector is in better equipped this time around as more developers have developed digital marketing capabilities and the government has allowed construction activities to continue.”