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Business News/ Budget / Budget Expectations/  Budget 2024: Industry status, more tax deductions, affordable housing boost among key expectations of real estate sector
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Budget 2024: Industry status, more tax deductions, affordable housing boost among key expectations of real estate sector

Industry status for the housing sector and single-window clearance for housing projects are standard asks and remain in place this year, as well.

Budget 2024: According to real estate industry experts, the government needs to take a hard look at adjusting the qualifying cost of properties within cities’ affordable housing segment.Premium
Budget 2024: According to real estate industry experts, the government needs to take a hard look at adjusting the qualifying cost of properties within cities’ affordable housing segment.

The Indian real estate market witnessed strong growth in 2023 with new residential launches and home sales reaching record highs. Housing sales in the top seven cities touched an all-time high of 4.77 lakh units last year.

The optimism was also reflected in the real estate stocks as the Nifty Realty index spiked about 94% in the last one year with stocks such as Prestige Estates Projects and Sobha surging almost 180% and 120%, respectively.

The real estate industry players always have high hopes from the Union Budget as the proposals announced by the Finance Minister have a significant impact on the demand and growth in the realty sector.

Also Read: Union Budget 2024-25: Four income tax benefits you could expect from Finance Minister Nirmala Sitharaman. Details here

Industry status for the housing sector and single-window clearance for housing projects are standard asks and remain in place this year, as well. 

“Since the pace at which the issues that the real estate sector faces get resolved is generally quite slow, these expectations haven’t changed much – though they’re as pressing as ever. That said, we must have reasonable expectations for the interim budget, which will be unveiled before the general elections," said Anuj Puri, Chairman – ANAROCK Group.

Here are some of the key expectations of the real estate sector from the Budget 2024:

Maximum deduction for home loans

The tax rebate of 2 lakh on home loan interest rates under Section 24 of the Income Tax Act is expected to be increased to at least 5 lakh. 

Doing so could stimulate a more robust market for housing, particularly in the budget homes segment, which has seen a decline in demand since the pandemic, Puri said.

Affordable housing boost

In the upcoming Union Budget 2024, the realty sector expects the Finance Minister to revive and extend significant benefits, such as tax breaks, to encourage developers to construct more affordable housing and to make it possible for customers to acquire such homes.

ANAROCK Research finds that the previously much-touted budget homes category saw a decline in overall sales - to approximately 20% in 2023 from over 30% in 2022, and nearly 40% in the period before the pandemic.

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Modify qualifying standards for affordable housing

Affordable housing is defined as a house or apartment valued up to 45 lakh, with a carpet area of up to 90 square metres, located in non-metropolitan cities and villages, and 60 square metres in large cities.

The definition provided by the central bank, however, is based on the loans that banks provide to individuals so that they can purchase apartments or build houses.

According to industry experts, the government needs to take a hard look at adjusting the qualifying cost of properties within cities’ affordable housing segment.

For example, a budget of less than 45 lakh is irrelevant for a metropolis like Mumbai; it should be increased to at least 85 lakh. The budget should be raised to at least 60–65 lakh for other large cities. With this price adjustment, more homes will be within the reach of more buyers, who will be able to take advantage of other advantages such as government subsidies, reduced GST rates at 1% without ITC, etc, Puri explained.

Also Read: Budget 2024: Higher capex to shift towards energy-efficient policies, here are key reforms expected

Release government land for affordable housing

The industry expects certain lands that are owned by Indian Railways, Port Trusts, Department of Heavy Industries, etc., to be released by the corresponding government agencies to address the problem of land shortage for the affordable housing segment.

When this land is released at low cost specifically for affordable housing, it will also significantly lower real estate prices overall, said Puri.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 04 Jan 2024, 02:57 PM IST
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