MMR’s Residential Realty Recovery Unlikely to Sustain: CRISIL
While the housing sector in the Mumbai Metropolitan Region (MMR) witnessed a pickup in sales in the September-October period, brokers said there was more to it than meets the eye. Too woo homebuyers, developers have been showering offers, such as lower booking amount and a full refund on cancellation, to register higher monthly sales. Besides, the market expects that the sudden rise in property registrations is unlikely to sustain after stamp duty rates return to the original levels. According to a 19 November report by CRISIL, new home sales in MMR in October were 1.3 times higher compared to January after the Maharashtra government reduced stamp duty from 5% to 2% till December and to 3% for the January-March period. “While overall rebound in real estate demand in October was faster than envisaged earlier, its sustenance post the festive season will be a monitorable," CRISIL said. “On a full-year basis, we estimate overall primary sales to witness a decline of 40-50% in top 10 cities." “Typically, in Mumbai, for a ?1 crore home, builders would not have accepted less than 10% as booking amount," a real estate broker said, requesting anonymity. “Now, the booking amount is down to anywhere from ?1 lakh- ?5 lakh, with the option of a full refund if the buyer wants to cancel the booking later. So, while sales in these festive months show higher bookings, the actual conversion into sales may be lower." Many developers are also absorbing the cost of goods and services tax and, in some cases, even footing the bill for building maintenance fees for the first 1-2 years, he added.
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