Mumbai property registrations, stamp duty collection record best ever August performance

Property registrations in Mumbai, the country’s biggest and most expensive real estate market, has continued its record-setting spree by clocking the best August performance ever in terms of both number of deals and stamp duty revenue despite rising interest rates and prices.

The country’s commercial capital has recorded over 8,310 property transactions during the month helping the state exchequer fetch stamp duty revenue worth over Rs 630 crore, showed the data from the inspector general of registration, Maharashtra, as on the last operational day of the month.

The number of deal registrations have risen 22% from a year ago and 41% from even the pre-pandemic period. The revenue collection has increased over 50% from a year ago owing to increased contribution from higher value segments and one percentage point higher 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. Despite that, Mumbai’s home sales momentum has remained comparatively buoyant,” said Shishir Baijal, CMD, Knight Frank India.

According to him, it may be too early to assess if the impacts of these rate changes on housing sales are long term and homebuyer sentiments are expected to sustain in the upcoming festive season.

“We have seen a 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,” said Rajan Bandelkar, President, NAREDCO National.

With the onset of the festive season, he urged the government to offer concession in stamp duty charges as offered at the time of the pandemic to further encourage homebuyers' interest in property buying.

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 rate hike in August had driven July registrations activity to the peak of over 11, 340.

Homebuyers are now expected to remain cautious while concluding their deals in the backdrop of anticipation of additional rate hikes effectively leading to a rise in mortgage rates impacting their affordability.

Over 95% of all property sales registrations in August were for properties transacted in the same month. About 3% of properties registered during the month were filed in July and around 2% of these deals were filed in March and June.

The share of homes with sizes ranging from 500 sq ft to 1,000 sq ft accounts to more than half the residential properties registered in August. Compact homes continue to be the second preference with a share take up of 32% in August. Homes ranging from 1,000-2,000 sq ft saw a share take up of 16% while the share of over 2,000 sq ft homes remained unchanged at 2%.