While all India residential sales saw a quarter-on-quarter (QoQ) rise of 84%, Mumbai (193%) and Pune (143%) recorded higher than average QoQ growth, Pune and Mumbai markets led the revival in residential property sales as well as new launches in the second half of the year.

Knight Frank India attributed the sharp jump in property sales in Pune and Mumbai to the Maharashtra state government’s move to reduce stamp duty by 300 basis points (BPS) for a limited period between September - December 2020 making home buying very attractive.

Knight Frank India also attributed the revival in residential sale during the second half of 2020 to specific reasons: a correction in values made a purchase of homes across all major markets highly attractive, a drop in home loan rates to a multi-decadal low which made fence-sitters, especially those with sound financials, take advantage and make their purchase and the need and desire to own houses that took care of buyers’ requirements influenced purchase decisions during the pandemic.

"New launches were also on the road to revival as most high-volume markets saw developers announcing new projects, since demand trends were seen to be highly encouraging. Both Mumbai and Pune saw an identical 121% QoQ rise in new launches. The leader on the board with over 480% QoQ rise was Hyderabad. With total launches across the country at 146,628 units, launches were lower by 34% YoY in 2020; and while unsold inventory levels improved, sluggish sales velocity in mid-2020 led Quarters to Sell (QTS) to rise to an average of 10.1 quarters."

Shishir Baijal, Chairman and Managing Director, Knight Frank India says, “Despite the on-going pandemic, the H2 2020 sales growth in some cities is fairly encouraging. In Q3 2020, the real estate market started witnessing revival signs, further recording a significant improvement in home sales during Q4 2020. Of the total sales number in H2 2020, Mumbai and Pune contributed around 50% in home sales. This marvellous performance can be largely attributed to the Maharashtra State Government’s decision of reducing the stamp duty. Other state governments need to follow suit and offer something similar to bolster demand across their markets."

Shishir further added, “The RBI’s decision to maintain low repo rates has narrowed the margin between rent and home loan EMI paid to banks. Driving house purchase affordability to extremely attractive levels, it has emerged as a major growth driver for the housing sector."

Rajani Sinha, Chief Economist, and National Director, Research, Knight Frank India said, “The rebound in residential sales in H2 2020, has been much stronger than what was anticipated a few months back. Apart from pent-up demand, there has been a combination of factors like lower housing prices, attractive offers/ discounts by developers, multi-decade low-interest rate, high household savings that have given a strong fillip to residential sales. Government policy support like the stamp duty cut in the case of Maharashtra has been a very supportive factor for the pick-up in residential sales in this region. Interestingly, the Maharashtra State Government’s revenue collection from registration has also picked up, implying that pick up in housing sales has more than compensated for the lower stamp duty."

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