Stock Mumbai skyline city property
Property value dips have been more marked in South Mumbai and less so heading into the suburbs. Image Credit: Atul Loke/The New York Times

Mumbai’s money keeps moving into property and that too despite the Maharashtra government not extending the stamp duty waiver on property registrations in March. Even then, Rs4.20 billion was collected as stamp duty last month, as 7,850 properties were registered compared to 5,640 units in June 2019.

But in May, only Rs2.68 billion was due to the calamitous second wave sweeping the state and the country, and quite a decline from the Rs5.34 billion in May 2019. Sure, people have been buying property in Mumbai, but in undefined patterns.

Property prices have increased too from the lows of 2020. Actor Ajay Devgan bought a bungalow spread over 5,000 square feet in Juhu for Rs475 million, and which would have sold for over Rs600 million pre-Covid. He paid a stamp duty of Rs23.7 million on the purchase.

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For actor and director Ajay Devgn, the new Rs475 million home in Juhu is a relative bargain. Image Credit: Supplied

Moving away from COVID-19 lows

A South Mumbai apartment that was priced at Rs150 million went on to sell at Rs90 million in the first phase of the pandemic in 2020. It received a stamp duty waiver, but now commands a selling price of Rs110 million.

The reason for the upswing in the most expensive city in India is that developers have smaller inventories and trying to make some cash while demand is still on the rise. The pandemic has made forecasts and predictability patterns highly unreliable.

Who would’ve thought there’d be 7,850 property buys in June in the midst of a strained and stretched economy? Even though it is not a sellers’ market, the seller is making some kind of profit.

But property sales in North Mumbai are taking place in a contrasting pattern to the South’s - and it has nothing to do with Bollywood's residential dominance in the suburbs. In Bandra West, a two-bedroom apartment, measuring 1,000 square feet, lists for Rs450 million and sells at Rs400 million. Clearly the 20 per cent drop in listing prices in South Mumbai are not at play in the North, where there is a paucity of developments and supply does not match the extensive demand.

Not much of a slide up North

So, the seller is more rigid with the pricing and gets whatever he/she asks for without having to conform to the South Mumbai pricing index. Recently, the Brihanmumbai Municipal Corporation (BMC) created a dampener with its proposal to increase property tax by at least 14 per cent based on ‘ready reckoner rates’ as on April 1.

Property tax rates are calculated based on the ready reckoner rates - or known as 'circle rates', as in Delhi - of 2015 in Mumbai and the BMC wanted to revise them. But on June 18, the Maharashtra government announced that there would be no change in property tax until such time the pandemic continued, as it did not seem fair to burden new buyers with an increase.

The announcement didn’t just come as a huge relief to home-owners and stakeholders, but assuaged buyer sentiments, leading to a spike in buys in June. It remains to be seen what the rest of this year will bring and at what cost. More importantly, will a structured buying and selling pattern emerge from it all?