homereal estate NewsBudget 2024: Real Estate anticipates revisions in affordable housing price bands, extension of PMAY support
Budget 2024: Real Estate anticipates revisions in affordable housing price bands, extension of PMAY support
In metros like Mumbai, stakeholders argue for an increase to ₹85 lakh or more, with other major cities suggesting a rise to ₹60-65 lakh. Such adjustments would enable a broader segment of homebuyers to benefit from current incentives like reduced GST at 1% without Input Tax Credit (ITC) and other government subsidies.
As Budget 2024 approaches, the real estate sector is expecting significant changes in the price bands that define affordable housing. Industry experts are calling on the government to re-evaluate existing criteria, particularly the pricing structure, to better align with the diverse economic landscapes across cities.
While the current unit size definition of 60 square meters carpet area is deemed appropriate by experts, concerns are raised over the universal pricing cap of ₹45 lakh for affordable housing, seen as impractical across most cities.
In metros like Mumbai, stakeholders argue for an increase to ₹85 lakh or more, with other major cities suggesting a rise to ₹60-65 lakh. Such adjustments, proponents argue, would qualify more homes as affordable, enabling a broader segment of homebuyers to benefit from current incentives like reduced GST at 1% without Input Tax Credit (ITC) and other government subsidies.
The Pradhan Mantri Awas Yojana (PMAY) scheme, a cornerstone for affordable housing, is set to expire in December 2024. The real estate sector is urging an extension of the scheme till December 2025 to continue providing central subsidies.
Eligibility criteria for homebuyers under PMAY, specifically the interest subsidies ranging from ₹2.3 to ₹2.7 lakhs, is seen as restrictive. Industry experts advocate for enhancements to these criteria to bolster affordability in the wake of rising residential prices.
“The share of sales in the (price band of) less than ₹50 lakh housing units (affordable housing sales) segment has dropped steadily from 48% in 2018 to 30% in 2023. Even as overall housing sales go from strength to strength and stand at 10-year highs, affordable housing sales have dropped 16% YoY in 2023. Homebuyers in this segment are most impacted by affordability constraints in an inflationary scenario characterized by high interest rates and increasing residential prices,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
There has been a consistent dip in the demand and sale of affordable houses post the Covid-19 pandemic. ANAROCK Research data points to a slowdown in demand for affordable homes post-pandemic, leading developers to scale back new supply in this category.
The total new supply share in the affordable category across top 7 cities has plummeted from 26% in 2021 to a mere 18% in 2023. In terms of sales, the budget homes category witnessed a decline to approximately 20% in 2023, down from over 30% in 2022, and nearly 40% in the period preceding the pandemic.
In an effort to support affordability, experts have proposed several recommendations to be considered in Budget 2024. One of them being Tax Rebate on Home Loan Interest Rates. Experts propose raising the tax rebate on home loan interest rates under Section 24 from ₹2 lakh to a minimum of ₹5 lakh to stimulate the affordable housing market.
“Through our recommendations, we have addressed some of the key fundamental issues that we believe will provide a huge boost to both demand and supply, through a mix of increased tax exemptions and tweaks in the definition of affordable housing – which is bound to provide a definitive way forward as Indian Real Estate is projected to contribute close to 20% of India’s economy once it reaches the $10 Trillion milestone” said Boman Irani, President, CREDAI.
(Edited by : Keshav Singh Chundawat)
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