Budget 2022: Real Estate Sector Expecting Benefits For Affordable Housing Segment

Budget 2022: Real Estate Sector Expecting Benefits For Affordable Housing Segment

The real estate  sector has been one of the most valuable sectors that are eagerly waiting for the upcoming Union Budget, 2022-23.  It is going to be presented by Nirmala Sitharaman, the Union Finance Minister, on February 1. The budget session, in the parliament, will continue from January 31 to April 8.  The real estate sector was vulnerable in the country since the pandemic hit. The prices of housing came down sharply from 2020. 

People  in the country faced employment cuts and wage reductions. Hence, they had lesser money to spend.  Eventually, real estate investments were hampered, and people who were thinking to buy a home for residential purpose were affected. This year's budget is expected to look at this segment.

However,  a significant  boost for the housing sector was a reduction in home loan interest rates. All of the major banks could cut the interest, as RBI kept the repo rate at a historically low level for the last 9 consecutive bi-monthly monetary policies, to give financial support to the citizens. It helped common people invest in the field.

 Last year,  the real estate sector experienced a strong comeback, and this was one of the important reasons. However, the rising inflation rate remains a concern for economists.  If the inflation rate further rises, it can severely impact common citizens' buying capacity, which will affect the real estate sector directly. Already many constructed projects were staying idle during the pandemic.

The  affordable housing sector is the most important category, as the larger section of the society invests in this segment. The affordable housing segment and the rental housing segment received a big boost in the Union Budget, 2021, as the government extended  the period for an extra deduction of Rs. 1.5 lakh for loans up to March 31, 2022. If the government extends this benefit, it can help to increase demands for the affordable housing segment this year.

Budget expectation, 2022 - redefining affordable real estate 

Commenting  on the present situation, Anuj Puri, Chairman of ANAROCK Group, stated, in 2021, "The top 7 cities rebounding to 90% of pre-Covid levels and new launches reaching 2019 levels. While the housing sector's prospects generally look upbeat in 2022, it remains to be seen to what extent, if any, the new Covid-19 variant Omicron impacts real estate activity. So far, it has not had any seriously dampening impact. The RBI and the government have pro-actively aided the sector with various demand boosters. The stamp duty cuts, tax benefits extension on affordable housing in last year's budget were strong moves that made a difference."

Regarding  budget expectations, Puri mentioned, "The residential sector looks forward to further support beyond the mainstay demands of industry status, easy availability of finance, and GST rates reduction. There is a need to hike the Rs. 2 lakh tax rebate on housing loan interest rates under Section 24 of the Income Tax Act to at least Rs. 5 Lakh. This could instantly infuse robust demand for housing, especially in the affordable and mid-segment categories. Personal tax relief, either via a cut in tax rates or revised tax slabs, would be a welcome move."

He added, "As per ANAROCK Research, affordable housing in 2021 accounted for approximately 26% of the overall supply across the top 7 cities...The government should seriously consider revising the city-wise pricing parameters to include a broader customer base under the benefits of extended to this segment. With price revision, more homes will fall within the affordable price tag, allowing more buyers to avail of multiple benefits like lower GST rates at 1% without ITC, government subsidies, and the tax deduction of a total Rs. 3.5 lakh on interest repayment of home loans."

Thanks: Goodreturns.in