Interim Budget 2024: More deduction for home loans, boost for affordable housing among expectations of real estate sector

Interim Budget 2024: India's housing market has seen unprecedented growth in 2023 despite the challenges posed by a surge in asking prices and the highest interest rates in the past six years. The real estate industry has experienced remarkable success, with residential property sales reaching all-time highs in both volume and value. In 2023, the top seven cities in India witnessed a record-breaking sale of approximately 4.77 lakh housing units. The sales figures for newly launched homes too were impressive, reaching close to 4.46 lakh units.

In 2024, the surge in demand is expected to continue, but perhaps at a slower pace, driven by the country's high economic growth and the anticipation of a decrease in home loan interest rates.

Sharing his views, Anuj Puri, Chairman, ANAROCK Group, said the real estate industry's outlook for 2024 is currently positive. But he added that the results of the upcoming general elections will also have a significant impact on the demand for and growth in residential real estate.

"The real estate industry invariably presents the Finance Ministry with a very ambitious wish list every year before the annual Union Budget. 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," Puri said.

Going further, Puri said that it is necessary to increase Section 24 of the Income Tax Act's Rs 2 lakh tax rebate on home loan interest rates.

"It is necessary to increase Section 24 of the Income Tax Act's Rs 2 lakh tax rebate on home loan interest rates to at least Rs 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 added.

 Affordable housing 

Puri further said that the epidemic badly affected affordable housing and as per an in-house research the 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 to the pandemic.

"Several interest stimulants that were offered to developers and consumers in this over the years have expired in the last one to two years. It is imperative 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," Puri said.

Sharing his views about affordable housing, which is defined as a house or apartment valued up to Rs 45 lakh, with a carpet area of up to 90 square metres, Puri said the government needs to take a close look at adjusting the qualifying cost of properties within cities.

"The government needs to take a hard look at adjusting the qualifying cost of properties within cities’ affordable housing segment. Although the units' defined size of 60 square metres is reasonable, the prices of up to Rs 45 lakh make them unaffordable to most target clientele. For example, a budget of

Recently, NAREDCO requested the Finance Ministry for a Rs 50,000 crore fund in the upcoming budget. The fund has been beneficial for home buyers and the real estate industry. In a letter to Finance Minister Nirmala Sitharaman, NAREDCO also sought other budgetary support and relaxations, including allowing input tax credit under GST and incentives for rental housing, in order to achieve "housing for all." 

In a letter to Finance Minister Nirmala Sitharaman, NAREDCO also sought other budgetary support and relaxations, including allowing input tax credit under GST and incentives for rental housing, in order to achieve "housing for all."

Also read: Interim Budget 2024, Lok Sabha elections: In run up to polls, what Jefferies says on Feb 1, Modi's guarantees

Also read: Interim Budget 2024: Jefferies expects railways, defence shares to stay subdued. Here's why