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Realism on realty

The market still seems over-supplied, though, and rental yields may not see a revival for some time. This might keep investors at bay. But there are many who want their own homes

The real estate sector is a large jobs provider and could hold the key to easing India’s unemployment troubles. But it has been in a bad way for a while, as developers struggle with large unsold inventories and a liquidity squeeze amid declining demand. On Thursday, finance minister Nirmala Sitharaman sought to reinvigorate the market by easing income tax rules. On the sale of new houses worth up to 2 crore, the permitted difference between the “circle rate", the minimum price in a locality assumed for tax purposes, and the actual price has been doubled to 20%.

With demand for homes in a slump, this is an acknowledgement of market reality. Builders had been offering all types of complex deals, packed with freebies, without reducing per-square-foot prices by much. High circle rates, designed to fight black money, were in the way. Wider leeway could push prices downwards and break market inertia, with purchases likelier to happen. Buyers have till 30 June to clinch deals. The market still seems over-supplied, though, and rental yields may not see a revival for some time. This might keep investors at bay. But there are many who want their own homes.

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