Buying Properties in Pune To Become More Expensive
Buying houses in Pune will become a bit more expensive owing to the increase in stamp duty by the Maharashtra government. The state government has decided to increase the stamp duty by 1%. This means that the total stamp duty for buying a property will increase up to 7% in Pune.
The decision has naturally attracted dissent from the real estate developer community. Developers believe that this move by the government will further dampen the already dampened sentiments of buyers.
Property prices in Pune
Property prices in Pune have gone beyond the affordability levels in recent times and continue to grow every year. This is due to several reasons. One of the major reasons for increasing prices is Pune’s proximity to Mumbai, one of the most expensive cities in India. Excessive demand for properties in Pune by its neighbouring cities and areas has pushed the property prices up. Pune is situated just about 3 hours from Mumbai. The second reason is that Pune is a growing IT and manufacturing hub. The IT and manufacturing industries are offering huge employment opportunities, not only to locals but people from outside as well. The third main reason is the increase in construction costs.
Impact on property buying
Real estate developers in Pune have condemned the move by the government saying that increase in stamp duty prices will further impact the already dampened real estate market. While increasing stamp duty and other taxes is considered one of the simplest ways of increasing government revenue, developers believe that this move will directly impact the customer as they have to pay more for purchasing a property. This will further plummet property sales.
Developers were hopeful of sales picking up during the Diwali festival season, as the festival season is considered auspicious by customers to purchase a property. However, the decree from the government came during the festival season.
Many government policies have left a sour taste in the mouth of developers. India is currently ranked at 182 out of 185 in terms of ease of dealing with construction permits according to a World Bank report. The report states that it takes an average of close to 200 days to receive at least 34 permits for starting construction activity. Obtaining all approvals increases gestation period for a project by at least 2-3 years. By that time, land cost rises 20-30% due to hefty interest. This increases the overall property price. Even the Real Estate Regulatory Bill which is expected to be a game changer for the realty sector once implemented does not talk about construction-related approvals.
With the current government policies, the end customer may have to bear the brunt in terms of increased property costs for some more time.
