Kolkata's housing market has seen a significant decline in home sale registrations, ending five months of growth. In July, registrations dropped by 18% from June and 13% year-over-year, with only 3,506 properties registered compared to 4,292 in June and 6,709 in July 2022. This downturn follows the withdrawal of state government incentives, including a 2% stamp duty reduction and a 10% cut in circle rates, which had previously bolstered the market. Mid-sized homes (501-1,000 sq. ft.) accounted for 47% of sales, while large apartments over 1,000 sq. ft. saw a sharp decline. CREDAI Bengal has urged the state to reconsider these policy changes to stimulate sales. Experts anticipate market adjustments, with potential recovery during the upcoming festive season.
Kolkata has experienced a notable decline in home sale registrations, marking a significant shift after five months of growth. In July, home registrations dropped by 18% compared to June and 13% compared to the same month last year. This slump coincides with the recent withdrawal of incentives that have supported the housing market for the past three years. The state government had previously reduced the stamp duty by 2% and circle rates by 10%, which played a crucial role in stimulating the real estate sector.
In terms of numbers, 3,506 residential properties were registered in July compared to 4,292 in June. For context, in July 2022, registrations were much higher at 6,709. The mid-sized homes, measuring between 501 to 1,000 square feet, constituted the most significant share of the registrations, accounting for 47% of total sales this July. However, this is a slight decrease from 51% in July 2022. Interestingly, the share of smaller homes, measuring up to 500 square feet, saw a substantial rise from 27% in July 2023 to 45% in July 2022. In contrast, large apartments over 1,000 square feet saw a significant drop, accounting for only 8% of total transactions.
The Bengal chapter of the Confederation of Real Estate Developers' Associations of India (CREDAI) has voiced concerns over the withdrawal of these incentives. Sushil Mohta, the president of CREDAI Bengal, recommended that the state government reconsider this move, arguing that the existing stamp duty rates are high compared to other states. He suggested that rationalising stamp duty could encourage more sales and provide a better contribution to the state's financial resources.
Experts have pointed out that the market's initial reaction to the removal of incentives was predictable. Abhijit Das, Senior Director (East) at Knight Frank India, noted that the decline in registrations was expected following the change in policy. According to him, as buyers adapt to these changes, a normalisation of registration numbers could occur in the coming months. With the festive season approaching, there is hope for a revival in the housing market. Moreover, the overall economic health and growth of the country will likely impact market stability and buyer confidence.
Regionally, home registrations in Kolkata show varying trends. The north zone has maintained its position as the leading area for apartment registrations, holding 34% of the total market share, followed closely by the south zone at 33%. The east zone's share remained stable at 11%, while the west zone's share decreased from 8% to 6% compared to last year. Central Kolkata also mirrored these trends, indicating a shift in buyer preferences and regional demand.
In conclusion, while the recent numbers show a downturn in home sales in Kolkata, various factors, including the recent policy changes and regional buying patterns, will shape the market's future. The response from both buyers and developers will be crucial in determining whether the trend continues or if recovery is on the horizon as the market adjusts to the new normal. Ongoing monitoring of the economic landscape and consumer sentiment will be necessary as stakeholders navigate these changes in the housing market.
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