As we approach the interim budget for 2024-25, the real estate sector in India stands at a critical juncture, balancing the achievements of an exceptionally strong 2023 with the upcoming general elections. In the past year, the residential real estate market showcased remarkable growth, reaching historic highs in both home sales and new launches.
However, the industry’s current wishlist, featuring calls for industry status and single-window clearance, will feature this year as well.
ALSO READ
Budget 2024 Live Updates: Union Budget 2024 Live Streaming, FM Nirmala Sitharaman Budget 2024 Speech Live
Railway Budget 2024 Live Updates: Indian Rail Budget 2024 Live Streaming
Budget 2024 Income Tax Live Updates: Income Tax Slab Rate Change Budget 2024 Live Updates
Budget 2024 Stocks to Focus: Union Budget 2024 Impact on Share Market Today
Apart from these, “the industry expects substantial changes, particularly in the domain of boosting consumer sentiment. Raising the maximum deduction for home loans under Section 24 of the Income Tax Act from Rs 2 lakh to at least Rs 5 lakh is crucial. This adjustment has the potential to reinvigorate the housing market,” says Amrita Gupta, Director of the Manglam Group and Founder President of CREDAI Rajasthan Women’s Wing.
“As we shape the economic landscape, let’s not overlook the importance of gender-sensitive and sustainable policies that not only fortify our economy but also empower women to thrive in a positive environment. With a commitment to align with the September 2023 Delhi Declaration under the G20 India presidency, the anticipation is for a substantial 30% year-on-year increase in gender budgeting. At the same time, the government should focus on building a long term plan for a sustainable future,” adds Gupta.
Also Read: Budget 2024: Will Standard Deduction limit be increased in this year’s interim budget?
India’s housing market showed impressive growth in 2023, overcoming challenges like rising property prices and the highest interest rates in six years. Despite these obstacles, the demand for real estate, particularly in the luxury and second home categories, remained robust.
“We anticipate that the 2024 Budget will favour homebuyers, supporting the sector’s ongoing growth. The recent focus on affordable housing is expected to continue even in the coming fiscal year. To sustain the positive trend observed in the market last year, the government can introduce measures such as providing maximum deductions for home loans and ensuring a stable interest rate environment. Now that inflation is under control, we hope that repo rates will remain consistent this year. This would significantly enhance prospects for both residential and commercial real estate markets, establishing a favourable setting for sustained sectoral growth,” says Aditya Khushwaha, CEO & Director, Axis Ecorp.
There is also an urge from the government to give a further boost to affordable housing.
Jetaish Gupta, Co-founder and Director of Adore Group, says, “In this budget the government should take a closer look at the affordable housing segment. A sunrise segment of the realty market, the category suffered a decline in sales during the pandemic. Currently, it comprises just 20% of the total housing sales, a marked difference from pre-pandemic days, when it accounted for 40% of sales. Through carefully curated policy impetus, tax breaks, and fiscal support, governing agencies need to help the sector revive, as it will be instrumental in bridging the widening housing gap.”
Gurmit Singh Arora, National President, Indian Plumbing Association, says, “No doubt real estate is on a strong footing and the segment is poised to grow vigorously in 2024. However, regulatory bodies and governments also need to play a pivotal role by integrating affordability and long-term sustainability. Indian urban centers still suffer from acute housing shortage and reports have suggested that by 2030, India needs an additional 25 million homes to bridge the gap. However, the government needs to take proactive steps in this regard. Besides lowering the lending rates in the affordable segment, the definition of affordability should be tweaked so that a greater number of households can come under its ambit. Developers should also be incentivized via better funding options, tax discounts, and R&D support. This will make the category sustainable in the long run.”
India’s real estate has grown steadily and the government needs to offer policy impetus and support to further give a buying boost to the industry. The sector plays a critical role in the economy and contributes to around 8% of the GDP. It is also the second biggest employment generator after the agriculture industry and more than 200 ancillary industries rely on it.
“Hence, the government should take proactive steps to boost the demand, rationalize the cost, and reduce the regulatory bottlenecks. In the coming budget, the governing agencies should look into giving real estate the industry status which is long due alongside mulling over single window clearance, tax breaks, and GST rationalization. This would not just be beneficial for the realty industry but the positive impacts will cascade into other related industries,” says LC Mittal, Director, Motia Group.
The Indian real estate sector peaked in 2023 with sales close to 5,00,000 in major cities, growing Y/Y by 31%. The bullish sentiments in the market will further continue in 2024 backed by a healthy macroeconomic outlook, stable lending rates, and an upbeat job market.
“So, the government should also bolster growth through prudent initiatives. One of them could be increasing the tax rebate on home loan interest payment to Rs 5 lakh from Rs 2 lakh. This will attract genuine homebuyers and boost the demand. Likewise, it should look into other parameters such as reducing the repo rates, offering tax holidays to developers, and finding other alternative sources of project funding,” suggests Anurag Goel, Director, Goel Ganga Developments.
The government also need to take a close look at both supply sides and demand drivers to help the sector grow further and mitigate any potential risk.
Aman Gupta, Director, RPS Group, says, “To boost demand, it should think about increasing the tax rebate on home loan interest, reducing the capital gain tax, and further lowering interest rates for the EWS segments. Similarly, to strengthen the demand side, it should create alternative funds, free land banks for new developments, rationalize the GST tax regime, etc. GOI should also promote green and sustainable real estate. Green realty can become mainstream only when there are concentrated efforts to support innovations and faster adoption of technologies.”
Hari Kishan Movva, Senior Vice President, SILA, says, “To stimulate the housing market, it’s crucial to increase the Section 24’s home loan interest rate rebate from Rs 2 lakh to at least Rs 5 lakh. This adjustment could particularly benefit budget homes, facing a 20% decline in sales in 2023 due to the pandemic. Reviving expired incentives, like tax breaks, is imperative for affordable housing. Modify eligibility criteria, considering the Ministry’s definition based on income, property size, and price. Adjust the qualifying cost for city properties; for instance, raise the budget to Rs 85 lakh for Mumbai. This ensures broader accessibility and utilization of government subsidies and reduced GST rates.”
