News | 31th Aug 2022
Property registrations in Mumbai, the country's biggest and most expensive real estate market, logged a 22% year-on-year increase this month as buyers shrugged off rising interest rates and prices, making it the best August in terms of number of deals and stamp duty revenue.
The city recorded more than 8,310 property transactions during the month, raking in more than ₹630 crore in stamp duty revenue for the state exchequer, showed data from the inspector general of registration, Maharashtra, as on the last operational day of August. The number of deal registrations was 41% higher than the pre-pandemic period.
The revenue that the property transactions generated for the state was more than 50% higher than a year ago, mainly on account of increased contribution from higher-value segments and a one percentage point increase in stamp duty rate.
"August has historically been a slower month, recording a month-on-month decline in eight out of the last ten years. The 140-bps rise in repo rate, leading to increase in home loan rates, and the increase in stamp duty has had its impact on buyer sentiments," said Shishir Baijal, chairman of Knight Frank India, a real estate consultancy firm. "Despite that, Mumbai's home sales momentum has remained comparatively buoyant."
Baijal said it may be too early to assess if the impacts of these rate changes on housing sales are long term and whether homebuyer sentiment will be affected in the upcoming festive season.
Rajan Bandelkar, president of National Real Estate Development Council (Naredco), said, "We have seen robust property buying in the past few months, as the extent of price rise passed on to consumers has been lower as compared to the increase in the input costs. It is very much likely that the Indian central bank will further hike interest rates to bring back inflation under control. As a result of that we have already started witnessing short-term repercussions on the overall housing demand."
With the onset of the festive season, he urged the government to offer concession in stamp duty charges, as was offered at the time of the pandemic, to boost home buyers' interest.
With imminent inflationary pressures, the Reserve Bank of India (RBI) has made three consecutive repo rate hikes totalling 140 basis points in a short duration - from May to August. The anticipation of a rate increase in August had driven July registration activity to top 11,340.
Home buyers are now expected to remain cautious while concluding their deals in anticipation of additional rate hikes, effectively leading to a rise in mortgage rates impacting their affordability.