To mitigate COVID-19 disruptions, the Government has shown adequate support by bringing in reforms in policies and announced some slew of relief measures to revive the economy. The reduction in stamp duty before the festive season by the State Government was a very important move which gave a much needed boost to the sector. The world resurrecting to the pandemic of Covid-19 has learnt the value of healthy living as customers too realized the importance of a well planned, well designed and a well ventilated home more than ever before. We immediately saw sales volumes coming back to normal due to a boost in the consumer sentiments on the back of all time low home loan interest rates, good festive offers, relaxation in GST and reduced stamp duty. These factors helped drive demand and boosted sales and were also the key in ridding the sector of the ills caused by the virus. Now with the vaccination drive going in full swing, a lot is expected from the upcoming budget that will give a further boost to revive the economy.
The forthcoming budget will be crucial in terms of Government reforms and we believe that the Government will take appropriate measures to spur consumer demand. With the pandemic’s impact still remaining far in the horizon, abundant policy support is still needed for the real estate sector’s bounce and we are hoping that the upcoming budget will emphasize that.
More tax sops and higher relief on the home loan rates will woo the homebuyers and investors to buy property. Additionally, interest rates on housing loans should be reduced to benefit a broader segment of homebuyers, including the first-time buyers. Also, the income tax benefit for housing should not only be for residential purchasers alone rather it should also be extended towards commercial purchasers as well. This can help the sector recover from its liquidity woes to a larger extent. We would also like to revive the input tax credit under the GST reforms which will help to keep the property prices under control.
The capping of Rs 45 lakh applicable for an affordable house should be extended to 60 lakhs. This would expand the benefits of affordable housing scheme to more homes and therefore boost the end-user demand. While incentives have been provided to boost the affordable housing segment, there needs to be a reduction in the cost of land, development premiums to incentivize developers to build budget homes. Since the high cost of land is another major constraint faced by the sector, steps taken by the government to unlock the value of land parcels held by government agencies / PSUs through partnerships with affordable housing developers can be a significant step. Such initiatives can also help the government to improve its revenue generation capability. The Government also needs to allocate more funds for Pradhan Mantri Awas Yojana (PMAY) which will help them achieve the target of ‘Housing for All by 2022’.
Timely start & completion of projects has always been a concern, and a single window clearance will help to swiftly execute projects making it a win-win situation for developers and homebuyers. The real estate sector has a significant direct contribution of around 6-7 to percent of the GDP. Therefore, it is utmost important that the sector should be accorded with the industry status. Industry status for the sector and single window clearance for projects has been a long-standing demand which we expect the Government to address.
Apart from this, we are expecting a more determined infrastructure push from the Government not only in the form of more funds but with strict guidelines on actual infra deployment. This will certainly boost the real estate sector and also generate more jobs that the Government had committed to deploy.
We anticipate the Government to announce incentives that will propel the growth of the sector such as introducing tax breaks which will increase public spending, less transaction cost, etc.