LIMITED PERIOD STAMP DUTY CUT WILL REINVIGORATE HOUSING MARKET
While any form of fiscal or tax incentive for home buying is a welcome move, particularly the stamp duty incentive in large markets like Mumbai and Pune had served as a crucial catalyst even during the peak pandemic period of 2020 and 2021. The market not just recovered from the ebbs of pandemic, but also charted a long-term growth path afterwards ensuring that the state exchequer emerged as the biggest beneficiary with increased revenue collections. A strong market typically does not need an incentive of this order and housing markets like Mumbai have demonstrated strong sales volume in last two years. However, the headwinds in the form of a significant 200 – 250 basis point increase in home loan interest rate over the last year has shrunk the house purchase affordability of a typical homebuyer by close to 15%. For instance, compared to an ability to purchase a Rs.1 crore home a year ago, the increase in mortgage rate has shrunk it to around Rs.85 lacs thereby serving a considerable headwind alongside the double whammy of increased construction and living cost. Hence, even though the homebuyer sentiment remains intact her ability to purchase that dream home has taken a hit. A helping hand from the state government in form of a limited period stamp duty cut will not just temporarily improve this ability but also boost consumer sentiment and reinvigorate the housing market.
Tags : stamp duty housing market Vivek Rathi Director Research Knight Frank India