Budget Expectations for 2018
The union budget is expected to be a positive ray of hope for the realty players this year. Some of the key expectations includeagreementto the present inflationary conditions and the hike in property deals.Apart from deduction on interest, we would urge the finance minister to consider specifications on deductions made for the payment of major amount of housing loans.
Affordable housing is a key driver for growth in the real estate sector and there will be an expectation of a better response from the buyers in themiddle income category. Developers will benefit from tax holidaysand it will aid in reducing endowment as affordable housing receives infrastructure status.Therefore, the developers will be able to pass morebenefits to the buyers.
Since two decades, developers have been concentrating on building homes for the mid and high income customers segment, but after infra status to affordable housing segment the trend has completely reversed and the segment has witnessed more project launches as compared to others.
Affordable housing witnessed a year on year growth of 6%, with Mumbai leading the trend. Granting industry status for the real estate sector will increase accessibility to long term financing at a lower cost. In regards to the new investments, the Union Budget should announce new models for implementation of public private projects.
Although the REITs ensure a positive outlook, there are no listings. To encourage this, the budget needs to cut down the long term capital gains holding period for REITs from three years to atleast a year.
We are expecting the rationalization of GST rates from 12 per cent to 6 per cent coupled with merging additional stamp duty and registration with GST or reducing the overall cost could ensure the industry is seeing progress in the right direction.
Residential prices are expected to be stable in the coming months due to which there will be an improvement in the sales and new launches resulting in an overall recovery. Here is hope that the long term market dynamics for the sector will remain positive throughout, especially in the residential market.
The industry is also expecting some reforms in land acquisition that will act as a stimulator for growth in affordable housing. Not only that, it will remove entry barriers for many private players, encourage new launches and ensure prompt delivery of projects.