Budget Expectations For Real Estate

While the Indian real estate sector faced numerous hurdles last year, the year 2017 is anticipated to see a breakthrough. The accomplishment, however, rests on the implementation of the radical reforms announced lately. A key factor defining the functioning of the industry across markets would be the Union Budget 2017-18. Policies favouring the homebuyer community would drive demand back and affordable housing segment would see maximum traction on the back of improving employment generation opportunities and home financing mechanism.

Apart from the Union Budget, realty stakeholders are looking forward to the successful implementation of Real Estate (Regulation and Development) Act (RERA), 2016 and Goods and Service Tax (GST) Bill. These clubbed with home loan rebates and incentives for first time home buyers would play a pivotal role in transforming the realty fortunes of the country.

The controversial demonetisation drive that negated realty sentiment, and impaired sales volumes and leasing activity in the last quarter of 2016 would eventually cleanse the market of black money and unscrupulous activities. This would eventually smoothen price points and accentuate home ownership appetite across various budget segments. It is projected that key micro-markets near IT hubs and central business districts (CBDs) would remain upbeat across all metros and drive maximum trade.

Key reforms

RERA, GST and Benami Transactions (Prohibition) Act are key policy reforms that are further anticipated to fillip realty landscape in the aforementioned markets and also boost capital values in the short term. While RERA seeks to protect homebuyers, and provide a level playing field for developer fraternity, GST will resolve the issue of multiple taxes levied on a homebuyer with a uniform tax fee across the market.

Benami, on the other hand, is likely to eliminate illegal property transactions and further stabilise price points across all budget categories, boosting housing demand and keeping the inventory glut in check.

Expectations from Budget 2017-18

With Union Budget 2017-18 in the offing, realtors anticipate more clarity on multiple announcements made in the year gone by.

Clarity on GST bill

Realty stakeholders anticipate clarification on GST tax rate. As ambiguity prevails on the tax rate slab under which real estate transactions would be levied, developers and end-users eagerly await a final verdict from the central government. The reduced tax rate under GST implies abridged home construction cost for the developer community and consequently, diminishing overall home buying cost for end users.

Clarity on home loan interest schemes

Confusion lingers on the recent home loan interest schemes announced under Pradhan Mantri Awas Yojana (PMAY). As the scheme gives rise to two new income groups, perplexity prevails regarding who would be the real beneficiary. “Housing for All” by 2022 mission also needs lucidity and tremendous boost to accomplish the target within the stipulated timeframe. Low interest rates on home loans for affordable category are also anticipated in order to revive the demand for affordable homes.

Clarity on industry status

Developers anticipate industry status tag for the real estate sector. As several sectors, such as steel and cement are heavily dependent on real estate which forms five percent of total gross domestic product (GDP), developers appeal for an “Industry” status, as it would aid them in easy sourcing of funds from financial institutions.

Clarity on all these reforms would not only bring transparency in the market, but would aid fence-sitters in better decision making, thereby, improving the realty landscape in the above areas.