Price correction post-slump in the real estate market plus the Indian government’s push to affordable housing is proving to be a boon for first-time homeowners. As per a recent report, houses in the affordable category, those costing less than Rs 25 lakh, now account for a fifth of all residential sales in India.
The share of the affordable housing in the real estate market has skyrocketed from 8 percent in FY16 to 21 percent in the current financial year, as per a data compiled by real estate consultancy firm Liases Foras. In fact, the sales of affordable homes almost tripled in the last three years.
During the same period, the share of luxury homes, those retailing for over Rs 2 crore, got slipped from 14 percent to just 5 percent.
The Narendra Modi-led Indian government has also intervened by doling out subsidies to economically weaker sections of society to enable them to acquire property. The incentives offered are drawing more and more developers as well as buyers to affordable housing segment with renewed interest following a rise in demand.
It is noteworthy here that households with annual incomes of less than Rs 18 lakh are eligible for a subsidy of Rs 2.3 lakh, which is paid out upfront on a home loan. Besides this, they can also avail income tax exemption on loans for housing.
Apart from this, the government is also offering developers tax sops through the PM Awas Yojna (PMAY), under which developers get 100 percent tax deduction on profits.
Flats with a carpet area less than 30 square meter falls under the affordable housing segment. To avail of the incentives by the government, projects undertaken have to be completed within three years.
The popularity of budget housing is expected to rise further in the coming years. Its share in the real estate market is expected to rise to 40 percent in the next two years.