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Budget 2024 Expectations: Real Estate’s Top Priority Is “Affordability,” Understand Key Requirements

<p><strong>Budget 2024 Expectations:</strong> According to research released on Wednesday by real estate consultancy Knight Frank India, sales of residential homes priced at Rs 50 lakh and lower decreased to 97,983 units in 2023 from 1,17,131 units in 2022. As a consequence, the proportion of affordable dwellings in all sales of housing has decreased from 37% to 30%.</p>
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<p>The consultant blamed the decline in sales of inexpensive houses on muted demand brought on by the confluence of increasing real estate values, higher mortgage rates, and the pandemic’s disproportionately negative impacts on this particular sector.</p>
<p>However, according to JLL’s analysis, affordability for house purchases is anticipated to increase in 2024 due to the anticipated 60–80 bps reduction in the repo rate in 2023. This will maintain the market momentum for the next year and keep purchasers’ affordability within fairly reasonable bounds.</p>
<p>The sector publishes its expectations at this time, amongst a range of growth figures, in the hopes that they would be taken into consideration for the Union Budget, which is set to be announced on February 1st. The 2019 budget will be an interim one, which is given when there isn’t enough time for a complete budget—usually because a government is leaving office or there are impending elections. It fills the void until the next administration unveils a comprehensive budget.</p>
<p>Before the yearly Union Budget, the real estate sector always sends the Finance Ministry with an extremely ambitious wish list.</p>
<p><strong>Budget and Real Estate Expectations for 2024</strong></p>
<p>The chairman of Anarock Group, Anuj Puri, said that record-breaking house sales and new product launches in 2023 marked an amazing expansion in the residential real estate industry. Sales of newly launched houses reached about 4.46 lakh units in 2023, while sales of housing in the top seven cities hit an all-time high of around 4.77 lakh units.</p>
<p>Puri went on to say that there is now optimism in the real estate sector for 2024. However, the demand for and growth in residential real estate will also be significantly impacted by the outcome of the next general elections.</p>
<p>Puri states that the issues listed below are still top priorities for India’s real estate industry;</p>
<p>Single-window approval for housing projects and industry status for the housing sector are regular activities that will not change this year.</p>
<p>These expectations are still very much in place, despite the fact that the real estate sector’s problems are often rectified at a very glacial rate. Nevertheless, we need to have realistic expectations for the interim budget, which will be released before to the national elections.</p>
<p><strong>Maximum house loan deduction (u/s 24)</strong></p>
<p>The Rs 2 lakh tax refund on house loan interest rates under Section 24 of the Income Tax Act must be increased to at least Rs 5 lakh. By doing this, the housing market may become more active, especially in the affordable housing sector, where demand has decreased since the epidemic.</p>
<p><strong>A significant push for affordable housing</strong></p>
<p>The impact of the pandemic on the target population for this sector has been particularly dire with regard to affordable housing. According to Anarock Research, total sales of the formerly highly criticized category of affordable houses decreased to around 20% in 2023 from over 30% in 2022 and almost 40% in the time frame before to the pandemic.</p>
<p>Not unexpectedly, the share of this sector in the top 7 cities’ total housing supply decreased from over 40% in 2019 to 18% in 2023.</p>
<p>In the recent year or two, a number of interest stimulants that were previously available to developers and customers in this sector have expired. Reviving and expanding large incentives, such tax cuts, is essential to motivating developers to build more affordable housing and enabling consumers to purchase such properties.</p>
<p>To increase the number of purchasers who qualify for the increased deductions, the affordable housing qualifying conditions should be modified.</p>
<p>Affordable housing is defined by the Ministry of Housing and Urban Poverty Alleviation as being based on the buyer’s income, the property’s size, and its price. In non-metropolitan towns and villages, affordable housing is defined as a home or apartment worth up to Rs 45 lakh with a carpet area of up to 90 square meters, or 60 square meters in big cities.</p>
<p>On the other hand, the central bank’s definition is predicated on the loans that banks provide to people so they may buy homes or flats.</p>
<p>The government must carefully consider changing the minimum price at which properties in the cities’ affordable housing market qualify. Despite the apartments’ stipulated size of 60 square meters being appropriate, a significant portion of the intended customers cannot afford them due to costs as high as Rs 45 lakh.</p>
<p>For instance, a budget of less than Rs 45 lakh is insufficient for a city the size of Mumbai; it must to be raised to at least Rs 85 lakh. For other major cities, the funding should be increased to at least Rs 60–65 lakh. More purchasers will be able to afford more houses thanks to this price adjustment, and they will also be eligible for additional benefits such as government subsidies, lower GST rates at 1% without the ITC, etc.</p>
<p><strong>Allocate public land for the construction of reasonably priced homes.</strong></p>
<p>It is also essential to address the land scarcity for this important housing sector. The relevant government organizations may release some land held by Indian Railways, Port Trusts, the Department of Heavy Industries, etc. When this property is made available for affordable housing at a reduced cost, total real estate costs will drop dramatically.</p>

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