(Image credits: Business Today)
The residential real estate market in 2023 saw unprecedented growth, hitting record highs in both new launches and home sales. Sales in the top seven cities surged to approximately 4.77 lakh units, while newly launched homes reached close to 4.46 lakh units.
The industry holds a positive outlook for 2024. However, the upcoming general elections’ results will significantly influence the residential real estate demand and growth trajectory.
The real estate sector presents an ambitious wishlist to the Finance Ministry annually, aiming for crucial reforms and support. The wishlist for 2024 echoes longstanding requests like industry status for housing and single-window clearance for projects.
Impetus from Union Budget
Amidst slow resolution of sector issues, the expectations for the interim budget before the general elections remain relatively unchanged. Yet, realistic expectations are crucial.
- Maximize Deduction for Home Loans (u/s 24)
- Suggest increasing the tax rebate on home loan interest rates under Section 24 of the Income Tax Act from INR 2 lakh to at least INR 5 lakh. This adjustment could bolster the housing market, especially in the budget homes segment affected since the pandemic.
- Revitalize Affordable Housing
- The pandemic severely impacted affordable housing, leading to a significant decline in sales, down to 20% in 2023 from over 30% in 2022 and nearly 40% pre-pandemic.
- Urges reviving and extending expired interest stimulants like tax breaks for developers and buyers in this segment.
- Modify Qualifying Standards for Affordable Housing
- Calls for a review of property cost qualifying as affordable housing within cities. The current cap of INR 45 lakh makes homes unaffordable for many. Recommends raising the cap to at least INR 85 lakh in Mumbai and INR 60–65 lakh in other major cities to broaden buyer accessibility.
- Release Government Land for Affordable Housing
- Addresses the land scarcity by urging government agencies like Indian Railways, Port Trusts, etc., to release land specifically for affordable housing at reduced costs. This initiative would substantially lower real estate prices overall.