Despite the pandemic, residential real estate, especially affordable and mid-priced housing, showed a strong comeback in real estate the previous year. This fact is evident clearly as two segments contributed for about 70% of total home sales that reached 90% of the pre-pandemic level. Also, there is a need for budgetary measures to fasten the growth momentum.The government should promote the post covid boost to homeownership to achieve the goal of “Housing for all.”
The Budget 2022 should clearly focus on extending tax benefits to buy affordable homes that are not only extended beyond March 31, 2022 but also increased further. Moreover, to motivate people to buy homes, the PMAY provisions should be amended and liberalised to cover more people in its ambit.
Post COVID-19, home buyers are looking for bigger homes with huge spaces to accommodate space for home office, online classes, physical fitness exercises, yoga, and meditation, apart from ensuring total safety and wellness.
The upper limit for 60 sq meters and 90 sq meter homes in metro and non-metro cities for eligibility under PMAY may be revised. Moreover, the upper limit of Rs 45 lakh as home cost to avail PMAY benefits for affordable, EWS, and mid housing segment requires to be raised further. Mumbai, like city where property rates are already high, is a similar case that requires this raise.
The government’s mega push to improve connectivity and infrastructure development has given rise to the homeownership trend in tier 2 and tier 3 cities. It is expected that the Budget should give sops to level up integrated townships in such cities.
The government should imply demand-side measures that reduce the cost of residential property acquisition by reducing GST on under-construction housing, stamp duty rationalisation, and removing circle rate and market rate anomalies on property. Lower GST or GST waiver on under-construction homes along with measures to fasten up deployment of SWAMIH fund to complete under-construction homes will help boost home buyers confidence in under-construction homes. Besides promoting homeownership, the Budget should also focus on boosting rental housing, which is critical to fulfill the “Housing for All” mission.
The upcoming Budget should also focus on rectifying supply-side issues and promoting home affordability. There’s also a clear case of income tax holiday extension to affordable home developers beyond 31 March 2022. as the steep rise in building material prices pose a threat to affordability, the high GST rates like 28% on cement and wall tiles and 18% on iron and steel products should be rationalised. Input tax credit restoration and faster project clearances will also help in making homes affordable. Offering easy and cheap credit to developers, especially to those engaged in affordable projects, plus providing idle governmental land to them at reasonable rates, will further help boost affordable housing. TDS for NRI’s in the commercial real estate segment should be brought down. The increased transaction cost emerging from the significant gap between market-rate and collectorate rate should be checked.
As infrastructure plays a crucial role in offering an indirect boost to the real estate sector, we expect to see further steps to boost it.