Ganesh Chaturthi celebrations have kicked off with abandon in Maharashtra after a two-year lull induced by the Covid pandemic. As the festive season takes off in earnest, real estate experts are hoping that it will lift housing sales, too.
Property registrations dipped in Mumbai city in August probably on account of the 140 bps rise in the repo rate, which led to an increase in home loan rates, as well as the increase in stamp duty, which hit buyer sentiment.
Sanjay Sippy, a real estate broker from Bandra, said bookings and sales are better than during the worst of the pandemic but there has been a slowdown in the market in the last two months due to several factors, the primary one being excess supply. Developers have also been seeking higher prices as sales have picked up. “For example, in Bandra, a few months ago we sold for Rs 57,000 to 59,000 per sq ft; developers are now asking for Rs 65,000 to Rs 70,000 per sq ft.”
Normally, in Mumbai, there is not a major spike in bookings or sales during Ganesh Chaturthi compared to Diwali. “However, there is definitely a slowdown in the last two months,” he said.
Another representative from a Mumbai-based realty firm agrees. “Sales are better than during the last two years of Covid-19, but there has been a slowdown in the last two months. The market has been experiencing a lull in June and July, which is reflected in August’s registration data. Having said that, there have been some bookings during Ganesh Chaturthi and this may reflect positively in October’s registration data.”
Most buyers, he added, have booked units by paying 1 percent of the total flat cost or have given Rs 1 lakh as a token amount. “They will make further payments in the next 30 to 60 days, and it is only thereafter that the data will reflect on how registration numbers have picked up.”
According to the representative, there was an increase in prices of raw materials such as steel and cement in April and May followed by an increase in interest on home loans and a hike in stamp duty by 1 percent, which resulted in a sales slowdown in June and July. This is reflected in the August data but things are expected to improve in the coming months.
Read: Mumbai sees 8,149 property registrations in August; exchequer gets Rs 620-crore boost
Mumbai city (BMC area) saw property sale registrations of 8,149 units in August 2022, contributing over Rs 620 crore to state revenues, according to data from the Maharashtra government’s Department of Registrations and Stamps (IGR).
Property sales registrations rose 20 percent year-on-year (YoY) in August 2022; however, they plunged 28 percent month-on-month (MoM), mostly due to the high level of registrations in July 2022.
Per the data, 11,339 units were registered in July 2022; 9,525 in June 2022; 9,523 in May 2022, and 11,744 units in April 2022.
Mumbaikars upgrading to bigger apartments
According to local brokers and realtors, with the Covid pandemic easing, a significant number of deals are taking place in the ‘upgradation segment’, which means that several people are upgrading to bigger apartments with better amenities and open spaces, including balconies.
“The majority of the buyers in the 2 BHK segment are those who have upgraded their apartments,” said a real estate developer from Kandivali, a suburb in Western Mumbai.
He added, “For example, I have buyers who were residing in say 700-800 sq ft 2 BHKs, but have purchased a 2 BHK in my under-construction project, where I am offering a 1,000 sq ft 2 BHK with better amenities and open spaces such as balconies. This shift is probably due to Covid-19.”
Read: The case of Mumbai’s disappearing balconies—and their reappearance
Ashish Narain Agarwal, Founder & CEO, PropertyPistol.com, said, “The trend of larger spaces is catching up. The Mumbai real estate market is bullish with renewed focus from property seekers, investors and NRIs for larger homes.”
Prices, too, have inched up in the last five to six months
Hiren M, a potential home buyer from the central suburbs of Mumbai, said, “I saw a 2 BHK for Rs 90 lakh four months ago in Thane, but did not buy it as I was negotiating with the firm. However, now when I followed up with them, the firm is asking for Rs 96 lakh for the same apartment citing an increase in the price of the apartment due to inflation. The developer is not offering anything extra but he has increased prices by over 5%.”
According to an analysis by Knight Frank, as many as 60 percent of all registrations in August 2022 were in the price band of over Rs 1 crore. In terms of apartment sizes, homes of sizes 500-1000 sq ft were the most preferred.
To boost demand, Rajan Bandelkar, president, NAREDCO National, is of the view that the government should offer concessions in stamp duty fees, as it did earlier in the pandemic to stoke property sales.
Sales up in Bengaluru but rates play spoilsport
Sunil Singh, a real estate broker in Bengaluru, said sales have picked up in the city over the last six months. “After the pandemic eased, several companies have gone in for the hybrid model and people have returned from their hometowns to Bengaluru. People moving here prefer buying rather than renting homes despite the rising cost of home loans.”
The trend of buyers purchasing bigger apartments or upgrading has also picked up in Bengaluru.
Disha Mohan, another realtor from Bengaluru, said, “After the pandemic, everything has changed. For example, before the pandemic people who wanted to buy a 2BHK are now opting for a 3BHK, especially due to the hybrid work culture.”
Raghavendra Rao from Indiassetz said the number of people buying homes after the pandemic has definitely increased. Rao, whose company deals with NRI investments in India, said, “Here people can buy a house in two ways: one through bank loans and EMIs, and the other by selling their old properties and investing in a new house.”
For instance, Shrinivas Rayabhattanavar, who was in Mumbai earlier, moved to Bengaluru after his retirement. He sold his house in Mumbai and reinvested the money to buy an apartment in Bengaluru.
Also, with rents inching up due to fewer launches, people are preferring purchases over rental homes.
Tameena AB, a PR professional from Kolkata who was in a rental in Bengaluru, left for home after the pandemic hit. Now, she plans to buy her own apartment in Bengaluru. “Initially I will be staying in a rented place, but I want my own house here in the next couple of months,” she says, “I want to have a house and move my family here.”
