Budget 2024: Hopes Rise for Reforms to Propel Real Estate Growth

The Indian real estate sector has witnessed significant growth in recent quarters, and with Budget 2024 on the horizon, there is a palpable sense of optimism. Industry stakeholders are eager to see the government implement favourable policies and allocate resources effectively to further strengthen the sector’s progress and stimulate economic activity.

Key Policy Expectations: A Wish List for Real Estate Revival

A number of key expectations are taking centre stage as the industry awaits the budget announcements. These reforms, if implemented, have the potential to significantly influence the direction of the real estate sector.

1. GST rationalization and industry status
   

   A reduction in GST rates and a simplified framework for claiming input tax credit are anticipated to lower property prices and enhance transparency. Granting industry status to real estate would make it more attractive to investors and potentially streamline regulatory processes.

2. Boosting affordability
   

   The re-launch of the Credit Linked Subsidy Scheme (CLSS) and an expansion of the definition of affordable housing to include properties valued up to Rs. 75 lakh could incentivize homeownership, particularly for middle-income earners. Additionally, an increase in government allocation for urban infrastructure development and potential waivers or reductions in stamp duty rates for first-time homebuyers would further increase affordability.

3. Tax benefits and financial relief
   

   An increase in the home loan interest rate deduction under Section 24 would provide substantial relief to homebuyers, making homeownership more attainable. Similarly, an increase in the principal repayment deduction under Section 80C would ease the financial burden on buyers.

4. Focus on sustainability and digitalization
   

   The budget is anticipated to introduce measures that promote sustainable construction practices in affordable housing projects. This could involve subsidies, tax breaks, and favourable loan terms for developers and buyers who prioritize eco-friendly building methods. Additionally, the government is expected to allocate funds to enhance digital infrastructure, particularly internet connectivity and digital banking facilities, in rural and semi-urban areas.

Increased Spending on Rural Housing Anticipated

The government is likely to increase subsidies on rural housing by up to 50% from the previous year, exceeding Rs 550 billion (USD 6.58 billion). This move aims to address rural distress, spurred by higher food inflation and sluggish growth in farmers’ incomes. The increase would mark the largest annual rise in spending on the rural housing programme since its inception in 2016.

Shares of Housing and Urban Development Corp surged by up by 12.3% in past week, while Aadhar Housing Finance and GIC Housing Finance saw gains of around 27.35% and 15.5% in past 1 month. Under the PM Awas Yojana (Rural) housing scheme, the government targets constructing an additional 20 million houses in the coming years, supplementing aid provided for over 26 million homes for poor households over the past eight years.

A Budget with the Potential to Transform Real Estate

The upcoming budget holds immense significance for the real estate sector. If the anticipated reforms are implemented, they have the potential to address key challenges, improve affordability, and propel the industry towards a period of sustained growth. Measures to boost rural housing and digital infrastructure development would further contribute to economic revival across the country. While the final details of the budget remain to be seen, the current optimism suggests a positive outlook for the real estate sector in the coming years.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.