Now that the Lok Sabha elections are over and Narendra Modi taking charge as the Prime Minister of India for the third time is done, the budget for the year 2024–25 will be presented in the Lok Sabha on July 22. Many groups have high hopes for this. They are expecting tax exemptions and other concessions. However, there is a debate about whether the demand for industry status, which has been pending for many years, will be granted to real estate. Questions are also being raised on whether steps will be taken to revive the affordable housing sector, which has fallen badly post-Covid.
So far in 2024, home sales and new launches have hit new highs in seven major cities in the country. In 2023–24, house sales reached a record level of 4.93 lakh units, and 4.47 lakh new units were launched. This trend is likely to continue in the near future as well. However, only medium- and premium-housing houses are doing well. But the affordable housing segment should also continue with the same aggressiveness in view of India’s low-income population. According to Anarock’s data, sales of affordable homes have declined post-Covid. In 2019, they were 38 percent, but in 2022, they decreased to 26 percent.
It fell to 20 percent in Q1 2024. Due to the decrease in demand for these, the supply has also decreased. While their share was 40 percent in 2019, it decreased to 18 percent in Q1 2024. In respect of the affordable housing segment, concessions given to both buyers and developers have lapsed in the last two years. In this context, experts believe that there is a need to give subsidies to this crucial sector again. They also want to revive the credit-linked subsidy scheme under PMAY.
It is said to bring back the 100% tax concession under Section 80-IBA for developers. Due to this, developers will start selling affordable houses, and the burden on buyers will be reduced. On the other hand, there are arguments that there is a need to revise the size and prices of affordable houses. At present, affordable houses in non-metropolitan cities should have a carpet area of 90 square meters. The same should have a carpet area of 60 square metres in big cities. The price of these in both places should not exceed Rs. 45 lakh. However, it is argued that this is inappropriate in the current situation.
Although the carpet area of 60 square metres is acceptable, it is stated that the limit of Rs. 45 lakh is not possible. In a city like Mumbai, for Rs. 45 lakh, one will get nothing. Therefore, this limit will be Rs 85 lakh, as suggested. In other cities, it is at least Rs. 60–65 lakh. We have to wait and see whether the central government will decide this direction in this budget.
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