Mumbai property market shatters records, at an all-time high in 2023

Source: The Economic Times

MUMBAI: Mumbai, the country’s biggest and most expensive property market, has continued its record-setting spree to surpass all the benchmarks and scaling a new all-time high in 2023 with its best annual performance ever despite higher interest rates and rising property prices.

The country’s commercial capital has achieved a new peak in terms of both, registration of properties as well as state exchequer’s revenue collection through stamp duty charges.

The maximum city has recorded total registrations of over 1.27 lakh real estate properties in 2023, making it the best year for property sales across primary and secondary market, exceeding last year’s peak by 4%. Total revenue collected through stamp duty rose 22% in 2023 to over Rs 10,850 crores, showed data from the inspector general of registration, Maharashtra.

“The year 2023 witnessed a remarkable upswing for Mumbai’s real estate market as the city achieved its highest property registrations, driven by rising income levels, better affordability, and a positive homeownership outlook. Supported by stable interest rates and an increasing preference for bigger and better homes, homebuyer confidence continues to fuel Mumbai's real estate momentum,” said Shishir Baijal, CMD, Knight Frank India.

Buoyed by a stable demand and a heightened positive sentiment, homebuyers have sustained their confidence in the property market. This positive outlook has led to a substantial upswing in property registrations across the city.

"Macro-economic indicators have remained healthy across India in 2023 with the economy growing at a faster than expected rate in the July-September quarter. We strongly believe that real estate and the volume of registrations that we’ve witnessed, have played a huge part in this,” said Boman Irani, President of realty developers’ body CREDAI National.

Over 12,250 property registrations, contributing Rs 932 crore to the state government revenues, were recorded in the month of December. While registrations showed a 33% on-year rise, revenue from stamp duty increased by 14% compared to the preceding year.

This is the second-best December performance in terms of registrations after December 2020 when stamp duty rates were halved in the backdrop of Covid19 pandemic. However, in terms of stamp duty revenue collection, December 2023 has set a new record.

According to Irani, the changing sentiments of homebuyers, wherein not only are home-renters converting into buyers, but also buying bigger homes - has played a huge contributing hand to sectoral and economic growth. He expects this sentiment to continue in the foreseeable future.

Over the past few years, there has been a steady increase in the percentage of property registrations valued at Rs 1 crore or higher. This percentage has climbed to around 57% in 2023 from 52% in 2020.

Knight Frank’s Baijal is of the view that a 57% increase in share of high-value property registrations attests to the robustness of the market.

The notable surge in property registrations has strengthened the government of Maharashtra’s financial reserves. The considerable growth in revenue can be attributed to various factors, including the registration of properties with higher values and the increased stamp duty rate.

The surge in property prices, coupled with a 250-basis point increase in the policy repo rate over the last two years, has negatively affected the segment priced below the Rs 1-crore threshold. However, properties valued at Rs 1 crore and above have demonstrated a relatively smaller impact from these headwinds.