Tag real estate market

Anuj Puri, Chairman – ANAROCK Group

The government’s revised budget announcement allows taxpayers to pick between a 12.5% Long-Term Capital Gains (LTCG) tax rate without indexation and a 20% rate with indexation, for properties purchased before July 23, 2024. This will have a very profound impact on both homeowners and aspiring homebuyers.

Homeowners: This change gives homeowners flexibility in their tax liabilities when they sell their property. For properties held over a long period, where inflation has majorly raised the property’s value, opting for the 20% tax rate with indexation would be beneficial. Indexation adjusts the purchase price for inflation, potentially reducing the taxable gain and overall tax liability. For properties held for shorter periods or in low-inflation periods, the 12.5% rate sans indexation could be more beneficial and result in a lower tax burden.

Homebuyers: This revision can potentially stimulate the residential property market because it provides clarity and implies potential tax burden reduction. Homebuyers’ sentiment will improve as they have flexible options for addressing their future capital gains tax burden. This will result in higher demand, particularly in markets where property values have been seen to rise significantly.

Also, the anticipation of these changes can potentially cause some homeowners to sell properties sooner to benefit from the new tax regime. This will raise the overall supply of housing units available on the market, helping to keep prices in check.

As per ANAROCK Research, H1 2024 saw total sales of nearly 2.51 lakh units across the top 7 cities, 9% more than the same period last year (H1 2023). Given that Q2 2024 saw sales tapering due to the election heat and the increased prices across cities, the new tax imposed by the government in the budget was considered a dealbreaker for many. Now, with the government giving these options to the homebuyers, housing sales momentum will continue unimpeded.

Mumbai real estate market witnessed a significant upturn in February 2024, with property registrations soaring to 11,742, a 21 percent increase compared to February 2023’s 9,684 registrations, and a 7 percent rise from January 2024’s figures, as per data from IGR Maharashtra. This growth marks the highest number of property registrations for any February in the last twelve years, underscoring a buoyant demand for real estate in India’s financial capital. The prior peak in February 2022 was fuelled by heightened optimism and the release of pent-up demand as the pandemic effects diminished. However, the recent upsurge can be credited to rising income levels and a favourable sentiment towards homeownership, said Knight Frank India in its report.

Despite this surge in property registrations, the sector faced a downturn in revenue from stamp duty collections, which saw a 22% year-on-year drop from Rs 1,112 crore in February 2023 to Rs 865 crore in February 2024. However, on a month-on-month basis, there was an increase in stamp duty collections from Rs 760 crore in January 2024.

Here are the comments from the real estate experts on the robust property registrations:

Mr. Prashant Sharma – President, NAREDCO Maharashtra “We are witnessing an exceptional period in the Mumbai real estate market, as evidenced by the remarkable number of property registrations in February 2024. The continued upward trajectory in 2024, not only represents a strong start to the year but also signals a healthy and resilient market environment. We remain optimistic about the sustained growth and vitality of Mumbai’s real estate market, driven by favorable economic conditions, increasing income levels, and a collective aspiration towards owning property.”

Mr. Pritam Chivukula – Vice President, CREDAI-MCHI and Co-Founder & Director, Tridhaatu Realty “The exceptional performance of the Mumbai housing market, marked by record-breaking home sales, reflects the city’s growing realization of the essential value of homeownership. This surge in demand is not just about securing a place to live; it’s about aspiring for an improved quality of life, fueled by rising income levels and the desire for a better lifestyle. Moreover, the development of new infrastructure has significantly enhanced connectivity and travel convenience, broadening the spectrum of housing choices available to prospective buyers. It’s a testament to how infrastructure development and economic growth go hand in hand in creating a vibrant housing market that meets the aspirations of its residents.”

Mr. Vedanshu Kedia – Director, Prescon Group “February 2024 stands out as a landmark month for Mumbai’s real estate market, with property registrations reaching a 12-year high. The market showcased remarkable resilience and growth that underscores the robust demand for real estate in the city. This surge in registrations paints a promising picture for Mumbai’s real estate sector. It is clear that the demand for homes in Mumbai is on an upward trajectory, driven by improved income levels and a positive outlook on homeownership. As we move forward, it’s crucial for stakeholders to leverage this opportunity to strategize and align with the evolving market demands.

Mr. Himanshu Jain, VP – Sales, Marketing and CRM, Satellite Developers Pvt. Ltd. (SDPL) “The Mumbai real estate landscape is witnessing robust growth, particularly in the demand for housing, leading to impressive home sale figures. A notable trend is the shift in preference towards the suburban areas, driven by the allure of improved infrastructure and connectivity which in turn enhances the quality of life. The demand for compact and affordably priced homes in these areas is on the rise, indicating a significant market shift. These homes not only offer an attractive price point but also cater to a broad range of lifestyle aspirations. The suburbs have become a focal point for those seeking quality living spaces that promise both comfort and convenience, marking a new chapter in Mumbai’s real estate development.”