Mumbai developers have been showering offers such as lower booking amount and a full refund on cancellation, to woo homebuyers and register higher monthly sales. This follows a lowering of stamp duty for property registration in Maharashtra from 5% to 2% till December and to 3% for the January-March 2021 period. Fueled by stamp duty cuts offered by the Maharashtra government and other advantages available to buyers, such as festive offers and discounts, many developers, including top-tier ones, have launched new projects in the past 3-4 months spanning suburbs and peripheral areas of Mumbai.
Some direct discounts are offered. There are also several indirect reductions in prices or benefits offered to buyers. Developers in top cities are also offering incentive schemes including delayed payments, free amenities, festival discounts, rent guarantee’s and absorption of state tax. Taken together, these typically knock between 5 per cent and 15 per cent off the effective price. Developers are keen to reduce home inventory levels, which are at historically high levels, to increase cash flows during the pandemic, according to brokers and real estate consultants.
Prices have risen very high over the years in MMR. There are projects that were launched 1-2 years ago that still haven’t been sold. A premium 3-bedroom home in an under-construction project in Lower Parel cost over ₹9 crores a few years ago; now it’s dropped to ₹7.25 crore levels. In another premium apartment next to ITC Grand Central, the price has fallen from ₹47,000 per sq. ft two years ago to ₹38-40,000 now. Home sales in the city, India’s commercial capital, jumped to an eight-year high in October, according to data from Knight Frank. It’s an abrupt turnaround for a market that’s spent three years in the doldrums after a prolonged shadow banking crisis strangled access to credit. At the end of June, prices in Mumbai were 0.45 per cent lower than the same quarter in 2018, according to data from the central bank.
India isn’t alone in seeing a resurgence in property despite the grim economic backdrop – the likes of New Zealand and the U.K. have also seen prices jump. Rather than worrying about the prospects of a bubble though, in India authorities are grateful for the rebound.
With millions out of work, a resurgence in house sales and a corresponding increase in the building could boost output everywhere from banks to builders to consumer goods factories. Construction creates the most jobs in India each year. Already financiers are getting in on the act.
Post-pandemic, mortgages are back in vogue among executives who see property loans as a relatively safe asset in a country where owning a house is a symbol of security and defaulting on loan repayments is a social taboo. Bad loans overall at the nation’s banks are estimated to swell to a two-decade high of 12.5 percent of credit by March.