NEW DELHI: Property sale registrations in Mumbai city (Municipal Corporation of Greater Mumbai MCGM region), dipped 20 percent in January to 7,732 units from 9,320 units in December 2021, due to the impact of the third wave of covid-19. Movement and mobility was hit during the initial two weeks of the Omicron wave in Maharashtra.
The per day average for property registrations was recorded at 249. The government earned Rs 543 crore as revenue from property registrations in January 2022.
"Cautiousness on account of the third wave has influenced sentiments which is reflected in January registrations. However, as previously experienced, we see this slowdown as a temporary blip and market will gain momentum as the rate of infection declines," said Shishir Baijal, Chairman & Managing Director, Knight Frank India.
While the registrations were lower by 26% on a year-on-year comparison over January 2021, revenues increased by 48% in the same period, said property advisory Knight Frank India.
"Government revenue collection in January 2022 was recorded at Rs 453 crore until 31th January and has crossed that recorded in January 2021 revenue of Rs 305 crore recording an increase of 48% YoY. It has come on the backdrop of lower property sale registrations at a higher stamp duty rate of 5% now compared to 3% last year," said Knight Frank.
In January 2021, lower stamp duty rate window (3%) and a dip in Covid-19 numbers had boosted sales. The Maharashtra government had in September 2020, reduced stamp duty charges from 5% to 2% for all residential transactions for the period September to December 2020 and 3% for the subsequent quarter of January - March 2021. Other factors such reduced home loan rates, largely stable prices, pent-up demand and a higher inclination to own home too contributed to a spurt in sales during 2021.
"The slashing of stamp duty had a positive impact on homebuyers as it directly reduced the financial outgo while purchasing a house. For instance, a homebuyer who bought a property with an agreement value of Rs 70 lakhs paid stamp duty of Rs 140,000, between September 1, 2020, to December 31,
2020, and Rs 210,000 between January 1, 2021, and March 31, 2021, as against Rs 350,000 without a rate cut at 5%," explains a report by CREDAI MCHI, Colliers and CRE Matrix.
And on January 12, 2022, the Maharashtra government has also approved property tax waiver for houses, with an area up to 500 sq ft in Mumbai. The move is expected to benefit about 16 lakh units. At the same time, the waiver will result in a revenue loss of Rs 462 crore for the exchequer.
More than 500 square feet category homes dominated the MCGM region with 60% sales despite the government sop to abolish property taxes. 45% of all sales in January 2022 were in categories above 500 – 1000 sf.
With the improvement in affordability, spacious homes of 500 -1,000 sf continued to be the preference accounting to 45% of the total registrations in January 2022. This was followed by compact homes of upto 500 square feet, which has bagged a share of 40%. Homes of 1,000- 2,000 sf accounted for 13% of total registrations.
Properties with a ticket size of Rs 1 crore and below continue to be a preferred choice for customers with a contribution of 51% of the total registrations in January 2022. Rs 1- 5 crore accounted for 45% of the total registrations in January 2022, which is a gradual improvement over last three months.
2021 saw highest sales in MMR
2021 saw the highest residential registrations in MMR in recent times at about 242,000 units, a 53% increase from 2020 and a 20% increase even over 2019, according to the ‘MMR Housing Uptick aided by Support’ research report, conducted jointly by CREDAI MCHI, Colliers and CRE Matrix.
Central Mumbai (Dadar, Lower Parel, Worli, Sewri, Mahim, Matunga, Parel, Wadala) saw the maximum revival in sales in 2021. Registrations here rose 93% from 2019 and 71% from 2020. Thane accounted for the highest number of registrations with 42% share, and highest stamp duty collection.
Western suburbs recorded the highest sales value with about Rs 49,000 crore in 2021. The sum accounts to one-fourth of total sales revenue in MMR.
Despite pandemic, property tax collection hit 10 year high
In FY 2020-21, property tax collections hit a 10 year- record high with collections of Rs 5,135 crore, meeting 98% of the projected target of Rs 5,200 crore despite the pandemic. Property tax is the second biggest source of revenue for the municipal corporation of Greater Mumbai after Goods and Services Tax (GST). As the stamp duty cut led to an upsurge in the number of registrations in the last 4 months of the year, the revenues for the Government also saw an uptick.
