Source: LiveMint ( https://bit.ly/3VSEaR7 )

Indian housing sector saw growth in sales and launches in FY23-24, but affordable housing segment declined post COVID. What is need is reviving incentives like credit-linked subsidy scheme and 100% Tax Holiday for developers to stimulate demand and supply in affordable housing sector.

With Union Budget 2024-25 set to be tabled in July, the real estate sector pins renewed hope on the Modi 3.0 regime.

“Expectations are high for tax reliefs and other sentiment boosters. The future of the overall industry also depends on unfettered infrastructure deployment to support and improve urban living standards as well as to develop and promote newer areas,” said Anuj Puri, chairman, Anarock Group, in a recent budget expectations note.

Puri questions whether the government will finally grant industry status to the entire housing sector and take substantial measures to revive the affordable housing segment, which has steadily declined since the pandemic.

However, Puri emphasised that while the current growth momentum in the housing sector is strong, it is largely skewed towards mid-range and premium housing. He highlighted that this trend cannot be sustained if affordable housing continues to lag, considering the specific needs of India’s lower-income groups.

The government should seriously reconsider revising the pricing of homes within the affordable housing budget to reflect city-specific market dynamics. While the current definition’s unit size of 60 sq. m. is appropriate, the price cap of ₹45 lakh is not viable in most cities, he said. For example, in Mumbai, a budget of less than INR 45 lakh is unrealistic and should be increased to at least INR 85 lakh. In other major cities, the budget should be raised to at least INR 60-65 lakh. These revisions would allow more homes to qualify as affordable, enabling more buyers to benefit from lower GST rates at 1 percent without ITC, government subsidies, and other incentives.