As the calendar turns, Anuj Puri, Chairman of ANAROCK Group, outlines the expectations of the industry from the upcoming interim budget for 2024–2025. The residential real estate market experienced remarkable growth in 2023, reaching unprecedented levels in terms of new launches and home sales.
In the top seven cities alone, housing sales touched a historic high of 4.77 lakh units, accompanied by nearly 4.46 lakh units of newly launched homes. While the outlook for 2024 appears positive, the forthcoming general elections will inevitably influence the trajectory of residential real estate, making the budget announcement a crucial event.
Key Expectations from the Interim Budget:
1. Maximum Deduction for Home Loans (u/s 24): Anuj Puri stresses the need to elevate the tax rebate on home loan interest rates under Section 24 of the Income Tax Act. Proposing an increase from the current INR 2 lakh to at least INR 5 lakh, Puri argues that such a move could invigorate the housing market, especially in the affordable homes segment, which witnessed a dip in demand during the pandemic.
2. Decisive Boost for Affordable Housing: The pandemic took a toll on affordable housing, affecting the segment’s target audience significantly. ANAROCK Research indicates a decline in overall sales for budget homes to about 20% in 2023 from over 30% in 2022. To address this, Puri recommends reviving and extending essential benefits, such as tax breaks, to encourage developers and make affordable housing more accessible to consumers.
3. Modify Qualifying Standards for Affordable Housing: An essential aspect of the wish list involves adjusting the qualifying standards for affordable housing. Puri suggests a reevaluation of the qualifying cost of properties within the affordable housing segment in cities. The existing definition, based on the property’s price (up to INR 45 lakh), makes it unaffordable for a significant portion of the target audience. Puri proposes increasing this limit to at least INR 85 lakh for metropolitan cities and INR 60–65 lakh for other large cities.
4. Release Government Land for Affordable Housing: Addressing the land shortage for affordable housing is crucial. Puri advocates for the release of certain government-owned lands held by entities like Indian Railways, Port Trusts, and the Department of Heavy Industries. Releasing such lands at lower costs, specifically for affordable housing, could significantly contribute to reducing real estate prices overall.
While the real estate sector consistently presents ambitious expectations to the Finance Ministry, Anuj Puri emphasizes the need for reasonable expectations considering the pace at which issues in the sector are typically resolved. The upcoming interim budget, especially in the context of the impending general elections, will be closely watched by industry players for signals that could influence the growth trajectory of India’s real estate sector.
