Owning a home in Mumbai to get a lot cheaper as Maharashtra cuts levies

The slashing of levies by the local administration may trigger a fall in home prices in Mumbai until December 2021, reports suggest.

The various levies effected by Maharashtra government on construction projects in recent days are expected to reduce development costs for most builders which in turn will boost stock prices of realty developers besides lowering prices for buyers, reported Bloomberg.

In a statement, National Real Estate Development president Niranjan Hiranandani said that the move will “help development at lesser input cost and, over a period of time, there is a possibility of lower price for new inventories that shall come into the market,” it reported.

Hiranandani said the move will help in “quick turnaround of projects and uplifting industry sentiments.”

The slashing of levies is likely to reenergise the real estate market which has been eyeing a recovery following a prolonged slowdown due to several reasons. An increase in house sales means more construction work, which is likely to boost output across sectors, from banking to consumers goods, according to the report.

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It may be noted that the construction sector provides the most number of jobs in India and that Mumbai is India’s costliest housing market.

In Mumbai, developers prefer to build vertically due to high cost and scarcity of land, and they pay different types of levies including for building more floors. According to the government-appointed panel that had recommended the slash in levies, the city has about 22 levies, the most anywhere in the country.

House sales in Mumbai had witnessed a 80% jump in October-December last year after the state government had reduced local taxes by 60%.