Real Estate Hopes for Big Changes in Modi 3.0’s 2024-25 Budget
With the Union Budget for 2024-25 set to be presented on July 23, the real estate sector is looking forward to potential tax reliefs and other positive changes. The industry, which provides many jobs, also needs better infrastructure to improve urban living standards.
Key Questions and Expectations
Real estate consultancy firm Anarock has raised important questions: Will the government grant industry status to the entire housing sector? Will it take steps to revive the affordable housing segment, which has been struggling since the pandemic?
Current Market Trends
In 2024, the housing market has been strong, with sales and new launches reaching new heights in the top seven cities. Sales hit a record high of about 4.93 lakh units in 2023-24, while 4.47 lakh units were launched.
Anuj Puri, Chairman of ANAROCK Group, emphasized the need to continue this momentum, especially for mid-range and premium housing. However, he noted that affordable housing is still lagging behind.
Challenges in Affordable Housing
According to ANAROCK Research, the share of affordable housing sales dropped significantly after COVID-19, from over 26% in 2022 and over 38% in 2019 to about 20% in Q1 2024. The supply of affordable housing in the top seven cities also fell to 18% in Q1 2024, from nearly 40% in 2019.
Puri suggested reviving the Credit-linked Subsidy Scheme under PMAY and reintroducing a 100% tax holiday for affordable housing developers to boost this segment.
Redefining Affordable Housing
Anarock also recommended changing the definition of affordable housing to include more buyers. Currently, affordable housing is defined by property size, price, and buyers’ income. For example, in non-metropolitan cities, it is a house with a carpet area up to 90 sq. m. and priced up to INR 45 lakh. In major cities, the size is 60 sq. m. and the price is the same.
Anarock argued that the price limit should be increased to at least INR 85 lakh in cities like Mumbai and INR 60-65 lakh in other top cities to make more homes qualify as affordable.
Infrastructure Status
Granting infrastructure status to the real estate sector has been a long-standing demand. This would help developers access funds at lower interest rates and streamline regulatory processes.
Upcoming Budget Session
The budget session of Parliament will start on July 22 and conclude on August 12. Finance Minister Nirmala Sitharaman will present her sixth budget, surpassing the record set by former Prime Minister Morarji Desai.
