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Mumbai Residential Property: Mumbai property market scales new peak, stamp duty revenue records best March

The country’s largest and most expensive property market, has scaled a new peak with record stamp duty collection in March led by the significant rise in sale of luxury properties as deduction from capital gains on investment in residential property will be capped to Rs 10 crore from April 1.

The government, in Union Budget 2023-24, announced the limit on the deduction from capital gains on investment in housing property from the new financial year.

The rush among homebuyers in other segments to conclude their deals before any likely hike in stamp duty charges and ready reckoner rates has also pushed the registration to highest in 2022-23 and the state exchequer’s revenue to record the best March performance ever.

These rates are usually increased with effect from the beginning of the new financial year. However, the government has not hiked the rates for 2023-24.

Property registrations in the country’s commercial capital recorded a 34% rise over February with 13,002 deals, while the state government’s revenue from stamp duty collections rose 8% to Rs 1,203 crore, showed data from the inspector general of registration, Maharashtra.

“Size of deals have gone up and tax-related factors have led to the growth in stamp duty revenue. While demand is good across segments, higher interest rates are proving to be detrimental for affordable and mid-income housing,” said Deepak Goradia, CMD, Dosti Realty.

According to him, given the improving connectivity and infrastructure, prospective homebuyers are ready to shift to other locations. However, further interest rate hikes will put more pressure on them.“In March, the Mumbai property market recorded its highest registrations for fiscal year 2023. Driven by rise in registrations and the resolute homebuyer desire for ownership, the state exchequer also made significant gains. This growth in registration volume reflects the market’s buoyancy despite the headwinds,” Shishir Baijal, CMD, Knight Frank India.

Mumbai has witnessed several high-value transactions in the luxury and super luxury segment in the last two months including some of the record-setting deals with considerations going as high as Rs 369 crore for a single triplex apartment in South Mumbai.

While the luxury and premium category have performed well, rising interest rates have started to impact the momentum in the affordable housing segment. The Reserve Bank of India raised the repo rate by a cumulative 250 basis points through six successive hikes in policy rates since May, pushing it to 6.5%, making loans expensive and weakening the affordability.

In March, apartments measuring 500 sq ft to 1,000 sq ft continued to be homebuyers’ preference, accounting for 48% of all apartments registered. Apartments with less than 500 sq ft saw a marginal decline in market share to 34% in March from 35% in January. The share take-up for areas larger than 1,000 sq ft declined to 17% in March from 21% in February.

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