The report estimates that home sales volume in Mumbai recorded at 7,929 units in October 2020 has seen a 42% rise over previous month boosted by stamp duty cut and festive period of Navratri and Dussehra.

Knight Frank India, leading international property consultancy, today released a report Mumbai Residential Snapshot October 2020 – which analyses residential sales for the Mumbai Metropolitan Region (MMR).

The report estimates that home sales volume in Mumbai recorded at 7,929 units in October 2020 has seen a 42% rise over previous month boosted by stamp duty cut and festive period of Navratri and Dussehra.

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This strong growth in October 2020 comes after a massive 112% month-on-month (MoM) growth during September 2020, when sales of residential started to show an upwards trend after months of COVID – induced slowdown.

At 7,929 units registered in October 2020, the residential sector of Mumbai recorded the highest ever registrations in the month of October over the last 8 years. The registrations in October 2020 jumped by a whopping 42% MoM and 36% year-on-year (YoY). This growth in registrations in October comes after a massive jump of 112% MoM and 39% YoY during September 2020.

TABLE I: OCTOBER SALES IN UNITS LAST 8 YEARS (MUMBAI)

Source: Department of registrations and stamps, Government of Maharashtra, Knight Frank Research

One of the biggest catalysts for this growth has been the reduction of stamp duty by 300 bps, which has been further matched by developers who have offered to absorb the remainder, thus significantly reducing the total outflow towards new home purchases. The reduction in home loan rates by banks to historic lows helped improve homebuyers’ loan eligibility and also aided sales growth.

Further, the developers innovated on their marketing prowess to include financial benefits, discounts and easy payment options to attract buyers during the period of lockdown. Developers were also able to garner buyer interest through the active usage of digital platforms during this period to engage with customers.

The lockdown confined people inside their homes where the office, school/colleges, and regular office, school/colleges,came together to operate within the boundaries of the house. This made families realise the need for having additional rooms in their house and created a demand for upgrading to a larger house which may not have been a necessity earlier.

All these measures culminated with the festive season which gave an additional fillip to sales. Realising that this is an attractive opportunity to buy their dream homes, the fence-sitters also entered the market.

TABLE II: SALES IN UNITS (MUMBAI)

Source: Department of registrations and stamps, Government of Maharashtra, Knight Frank Research

Mumbai has witnessed a cumulative residential sales of 13,526 units after the stamp duty cut during September-October 2020. The monthly run rate in this period after the stamp duty cut is approximately 120% or 1.2 times the monthly average of 2019.

CHART I: GOVERNMENT COLLECTIONS FROM STAMP DUTY (INR MILLION)

Source: Knight Frank Research, Department of registrations and stamps, Government of Maharashtra

 It is important to note that even after the stamp duty cut in Sep 2020, the State Government’s revenue collections from stamp duty have increased in Oct 2020 to INR 2,328 million compared to INR 1,764 million in Aug 2020. This shows that the boost to housing sales has more than compensated for lower duty and hence benefitted the State Government in terms of revenue collections.

Shishir Baijal, Chairman and Managing Director, Knight Frank India said, “The growth in sales of residential units has bounced back in MMR region supported by the stamp duty cut by the Maharashtra State Government. The lowering of stamp duty has helped significantly in stimulating demand especially from the end-user consumers. As end-users are highly discerning, factors like lower home loan rates, reduction in stamp duty along with the incentives provided by the developers, have helped buyers realise greater value from their purchases.”

Shishir continued further, “The demand momentum in this market is likely to continue buoyed by the festive demand and recovery in the economy. Those with financial stability during these times, are viewing this period as the perfect opportunity to invest in properties, as entry price is attractive. Further, the tangibility of the asset provides a certain assurance including its availability as collateral for future funding.”

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