Budget 2024: Realtors demand Govt’s focus on the affordable housing

As the union budget is nearing, stakeholders of the country’s real estate sector are increasingly putting forward their demand from the Finance Minister Nirmala Sitharaman. While, their demands are wide-ranging - from reduction in goods & services tax (GST) to removal of regulatory hurdles, one of the key demands that is gaining chorus this time is aid for the faltering affordable housing sector.

The once booming affordable housing market in India has performed poorly over the last five years. As building affordable homes turned unviable for developers post-GST, its share has fallen sharply. From a peak of 45% in 2017 in the country’s overall housing market, its share has fallen to 15% in early-2024 as developers moved away from the segment due to steep rise in raw materials and prices of land parcels in urban areas. In one of the country’s booming market for affordable homes - Gurgaon, for instance, land prices have jumped 2-3 times since the pandemic begun in 2020, says Pradeep Aggarwal, Chairman of Signature Global. Factors like these have turned affordable home projects unviable for developers.

According to Dhruv Agarwala, Group CEO, Housing.com, PropTiger.com, demand and supply for affordable homes have shown fluctuating trends over the last three years across major tier I and tier II cities. “In response, the upcoming budget should focus on revitalising both demand and supply for homes in the Rs 15-75 lakh per unit price bracket. Introducing interest subsidy programs could incentivise potential homebuyers effectively. To boost supply, the government could strategically deploy its extensive land banks in partnership with private developers, offering land and capital at concessional rates,” he says.

Implementing tax incentives for developers engaging in these affordable projects could further stimulate activity in this sector. “It's noteworthy that substantial demand persists within the Rs 15-75 lakh price category, necessitating focused governmental action in the upcoming budget. This approach would not only catalyse growth in the real estate sector but also stimulate approximately 200 ancillary industries, substantially boosting job creation across these sectors,” says Agarwala. Additionally, state governments should be motivated to reduce stamp duty on affordable housing to make these homes more accessible.

“It is crucial that the government continues to prioritise affordable and sustainable housing initiatives. Policies supporting affordable housing will help bridge the housing gap and ensure decent living conditions for all citizens,” says G Hari Babu, National President of NAREDCO.

According to Aggarwal from Signature Global, expanding the definition of affordable housing to include homes up to Rs 75 lakhs with a larger carpet area of 90 sq. meters, along with the relaunch of the CLSS scheme or similar scheme will further benefit homebuyers.