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Election 2024 results: Real estate sector hopes for continued focus on infra development, affordable housing

June 4th, 2024

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The real estate sector hopes that the new government would continue to focus on infrastructure development, work towards lowering home loan interest rates, prioritize affordable housing, and provide tax incentives for sustainable development.

“The real estate industry always looks towards a stable government that will ensure no interruptions in the ongoing schemes and investments into infrastructure development. This, above everything else, unleashes the real estate potential of current and developing geographies,” said Anuj Puri, chairman, Anarock Group.

Pradeep Aggarwal, founder and chairman, Signature Global (India) Ltd said that as India reinforces its position as the fastest-growing large economy in the world, with a GDP growth of 8.2% in FY 24, surpassing the previous year's 7.0% growth, “we are confident that the new government will sustain its focus on real estate and infrastructure development beyond metro and large cities. These sectors have a profound multiplier effect on the economy.”

Reacting on the results of the Lok Sabha elections 2024, NAREDCO National President G Hari Babu said, "The real estate sector is at a crucial point, with great growth potential but significant challenges. To reach a market size of $1 trillion by 2030 and become a net-zero carbon industry by 2047, we need government support."

“Making affordable housing more accessible by adjusting financial limits and providing incentives for builders is critical for the real estate sector’s progress,” he said.

The increase in home loan interest rates from 6.25% before COVID-19 to around 8.75% today has made monthly EMIs very expensive, particularly for middle-class families. “We urge the government to provide relief by offering lower interest rates for affordable housing loans. This can be achieved by setting the first ₹20 lakh or ₹25 lakh of a home loan at a 5% interest rate for the first five years,” said Babu.

The real estate sector wants specific policy reforms to stimulate growth, particularly in affordable housing. “Raising the ₹45 lakh limit to ₹60 lakh is one such reform that would address the challenges faced by builders and buyers. This adjustment would account for the significant increase in land costs over the past seven to eight years," he said.

Increasing the ₹45 lakh limit to ₹60 lakh would make it more feasible for builders to construct affordable homes and for buyers to purchase them. This change would reflect the current economic realities and help maintain the momentum in the affordable housing market. The original limit was set seven years ago, and adjusting it to match inflation and land cost increases is crucial, he added.

Samir Jasuja, CEO and MD of real estate data firm PropEquity, pointed out that real estate prices have surged in recent years, nearly doubling in the last four years. On the contrary, he said, tax deductions offered on home loans haven't kept pace. In effect, the benefit of these deductions has been halved taking into account the rising property values.

"In order to achieve the government objective of $1 trillion real estate industry, reforms are needed to incentivise both buyers and investors," Jasuja added.

Ease regulatory constraints, streamline approval processes
Additionally, easing regulatory constraints and streamlining approval processes would further boost the sector's growth, said Babu.

Puri said that “With government continuity, we can look forward to a major boost for the affordable housing sector, this being a flagship scheme that had not fared well over the last term. Affordable housing (homes priced under ₹40 lakh) sales in Q1 2024 recorded 26,545 units, which is just 20% of the total sales. Concurrently, supply in this critical segment had also dropped from 44% in Q1 2019 to 18% in Q1 2024.”

“A stable government with a strong focus on development and increased expenditure to build assets reinforces the confidence of global investors who are hoping for a wider spread of options in India,” he said.

Provide incentives for sustainable development
Other reforms should include providing financial support and incentives for sustainable development to the real estate sector.

“This could involve tax incentives for green buildings, subsidies for using eco-friendly construction materials, and policies that promote energy-efficient practices. These measures would help the sector meet its goal of becoming a net-zero carbon industry by 2047,” said Babu.

Ease burden on Goods and Services Tax
The sector hopes that the new government will work towards easing the burden of Goods and Services Tax (GST) on both developers and homebuyers.

Source: hindustantimes.com

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