Post the budget, there were mixed reactions from the real estate sector as the players in the segment feel that much more could have been done for the sector. THE WEEK in its pre-budget analysis had mentioned that rationalisation of GST rates, further push towards affordable housing and granting a full-fledged industry status to the segment were some of the major demands of the real estate segment. Additionally, there was also a demand to increase the home loan interest rebate to boost the sector. Many players were also demanding that the clearance window should be streamlined so that things move smoothly in the segment. Though there has been announcement with regard to the affordable housing segment not much has been stated with regard to the other demands.
Real estate experts such as Anuj Puri, Chairman – ANAROCK Group are of the opinion that the sector had hoped for more but saw only marginal benefits. From a real estate point of view, the first thing that stands out is the government’s continued focus on infrastructure with an allocation of over Rs 11.11 lakh crore - nearly 3.4 percent of India’s GDP. Improved infrastructure drives real estate growth.
“The focus on rural and urban job creation, if effective, may provide some boost to affordable housing, which has given a tepid performance since the pandemic. The move can help stir up housing demand in not just the top seven cities but also the tier 2 and 3 cities. With an eye on the housing needs of the urban poor and the middle class, the government has announced that it intends to construct an additional one crore homes under PMAY Urban 2.0 with an outlay of Rs 10 lakh crore. Mega allocation for the Hyderabad-Bengaluru industrial corridor and Vizag-Chennai corridor will boost growth along these corridors and consequently boost real estate growth there,” said Puri.
The pandemic had a catastrophic impact on the MSME sector, which slowed down the demand for affordable housing since 2020. “Affordable housing demand may gain momentum once the economic impact of the pandemic subsides for this target audience. This is certainly pertinent – the affordable homes category (less than Rs 40 lakh) has been seeing a decline in overall sales since the pandemic, to approx. 19 per cent in H1 2024 from over 38 per cent in the period before the pandemic in 2019. Consequently, this segment’s percentage share of the total housing supply in the top seven cities also fell to 18 per cent in H1 2024 from nearly 40 per cent in 2019. Any boost to this vital segment is therefore welcome. Similarly for individual taxpayers under the new tax regime, the increased standard deduction limit to Rs 75,000 from the previous Rs 50,000 along with the new income tax slabs implies savings---but hardly enough to boost housing demand,” adds Puri.
Some players in the field have said that an outlay towards three crore additional homes under PMAY with Rs 10 lakh crore allocated towards 1 crore homes in urban areas as well as considering bringing back interest subsidies is a positive step which will support the affordable housing segment but there have no larger focused push towards the sector.
“While the Budget outlines policy continuation to achieve the stated growth and development of the nation, with a focus on youth, women, farmers and the poor, there were no surprises for the real estate sector. The support extended to the affordable housing will convert into a renewed push for this segment, which has been witnessing challenges,” remarked Samantak Das, Chief Economist and Head of Research & REIS, India, JLL.
Das also points out that while stamp duty rationalisation advisory to states and further creating a transparent rental housing market announcements were made, there were no straight solutions offered. “Though moving towards a transparent land registry market through GIS mapping, etc. as part of the next generation reforms is laudable, it needs more operational and target-based announcements,” added Das.
Some players in the sector feel that the push towards affordable housing will help meet the housing demand of the poor and the middle class. “The Rs 2.66 lakh crore allocation for rural development, including 3 crore houses under PM Awas Yojana in both rural and urban areas, and the Rs 10 lakh crore allocated for homes for the poor and middle-class, augments housing prospects and addresses the housing shortage. Additionally, reducing stamp duty for women supports home ownership aspirations. We appreciate the government's proactive approach in the budget, particularly in prioritizing affordable housing and recognizing the real estate sector's potential to stimulate economic growth,” said Bijay Agarwal, MD, Sattva Group.
