Amid the fears of a global growth slowdown and geopolitical uncertainty, the FY2024 Union Budget will be tabled in the Parliament on February 1. This will be the last full Budget presentation before the general elections in 2024.
Different sectors have different expectations from this Budget. This article focuses on real estate sector and the expectations of home buyers.
The housing sector did well in 2022 with residential property sales increasing by over 50 percent compared to 2021. The growth in residential real estate sales in 2022 has been driven by improving affordability, competitive interest rates on home loans and robust end-user demand on the back of continuing aspirations for owning/upgrading homes.
To further increase the consumer demand in the housing space and make it more accessible to the common man, Anuj Sharma, chief operations officer (COO) of India Mortgage Guarantee Corporation (IMGC), the country's first mortgage guarantee company, has listed a few expectations of home buyers from the upcoming Budget. Let's take a look:
1. Tax exemptions or deductions for first-time home buyers: These measures can help reduce the overall cost of purchasing a home, making it more affordable for first-time buyers.
2. Increased allocation for housing schemes: This can help increase the availability of affordable housing options for home buyers.
3. Infrastructure development initiatives: Improvements in infrastructure, such as roads, public transport, and utilities, can make certain areas more attractive to home buyers and increase the value of properties in those areas.
4. Measures to increase the supply of housing: This could include initiatives to make it easier for developers to build new housing projects or measures to encourage the construction of more affordable housing.
5. Measures to regulate the real estate market: This could include efforts to curb speculation and prevent price inflation, which could make it easier for home buyers to afford properties.
6. Interest rate reductions: Lower interest rates on home loans can make it more affordable for home buyers to borrow money to purchase a home.
7. Relaxation of rules for availing home loans: This could include measures such as reducing the required down payment or easing eligibility criteria for home loans, which could make it easier for home buyers to secure financing.
In another report, ICRA mentioned that schemes such as PMAY (Pradhan Mantri Awas Yojana) have played a pivotal role in improving home ownership and continued focus on budgetary and extra-budgetary allocation to such schemes can improve the access to housing in the low- to mid-income segments of the population.
The pending expenditure in PMAY is over ₹1 lakh crore, while the allocation was ₹48,000 crore in FY2023 (Budget estimate) and the same needs to be ramped up to ₹76,000 crore in the forthcoming Budget in order to meet the target of 50 million dwelling units under PMAY. There are 4.6 lakh stuck residential units in the country, it informed.
ICRA further noted that the government and the PSUs continue to hold significant, well-located and non-core land bank. While steps have been taken to monetise this in the past, additional thrust is needed to expedite the process of divestment/monetisation of the surplus land bank to improve the availability of land for real estate development, it said.
In the commercial real estate segment, incremental steps taken over the past years have resulted in a successful track record of REIT issuances. Further, steps taken to improve the ease of access to debt capital (from long-term investors - insurance and pension funds) and enhance retail participation can channel more investments into this segment, added ICRA.
