‘Rise in ready reckoner rate has little effect on home sales’
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Data of past 3 years notwithstanding, developers still apprehensive.
Even as developers are worried about the increasing ready reckoner rates denting property sales, data over the last three years shows that these may not have a direct impact on home sales.
While the rates have been steadily increasing since 2010, the surge has not had any substantial impact on home sales, which have remained range bound.
For example, the ready reckoner rates across key regions of island city such as Colaba, Worli, Malabar Hill, Cumbala Hill, Parel Sewri and Dadar have risen in the range of 55-95 per cent, while home sales since 2010 have remained around 9,700-9,900 units per year in the island city.
Ashutosh Limaye, head (Research & REIS), Jones Lang LaSalle India, said: "This is a myth that increase in ready reckoner rates influences home sale registrations. Although there is an impact of the increase in stamp duty as a result, on the total price of the house, it is peanuts." In fact, stamp duty is a small part of the increase which is incorporated in the rising property prices, he added.
Similarly, ready reckoner rates in the suburbs have also shot up in the same range, but data from consultancy firm Liases Foras shows that despite the steady increase, across the city home sales per sq metre first fell 28 per cent from 2010 to 2011, but increased by nearly the same rate in the following year.
A real estate broker said developers like Nirmal Lifestyle tend to absorb the increase in stamp duties to decrease the burden of home buyers. They will not do so without a comfortable profit margin, he said.
Pankaj Kapoor, founder and managing director of Liases Foras Real Estate Rating and Research said: "Increase in ready reckoner rates cannot affect decision-making of home buyers. Although the increase in stamp duties adds up to the burden of the consumer, the biggest culprit of low sales is the market price," said Kapoor.