Budget 2024: Real estate sector bats for revival of affordable housing

The real estate sector wants “high-impact” measures, like special schemes and tax breaks for developers, to revive the fortunes of the affordable housing segment in the country, multiple executives told Business Standard.

This segment has been struggling since the Covid-19 outbreak, in contrast to larger and costlier homes which have been selling like hot cakes.

The demand comes at a time when the government is taking suggestions from industry players before tabling the General Budget in the Parliament next month.

According to the data from real estate consultancy Anarock, the sales share of affordable housing in India reduced significantly from over 38 per cent in 2019 to 20 per cent this year.

Due to low demand, the share of affordable homes in the overall supply also fell to 18 per cent this year, from nearly 40 per cent in 2019.

“Considering the specific housing needs of India’s lower-income groups, this momentum cannot ride solely on higher-priced homes while affordable housing continues to languish,” said Anuj Puri, chairman at Anarock Group.

He said that this segment must be revived with “high-impact” measures like tax breaks for developers so that they can focus more on affordable housing, and for buyers, to improve affordability.

Himanshu Jain, vice president, sales, marketing & CRM, Satellite Developers Private Limited (SDPL) added that special schemes and subsidies should be introduced for affordable homes in metro cities.

“Strengthening policies and providing additional incentives to developers engaged in affordable housing projects will ensure that more citizens can achieve their dream of home ownership,” Jain said.

“Metro cities, particularly Mumbai, face unique challenges due to high land and construction costs.

"We urge the government to introduce special schemes and subsidies tailored for affordable housing in metropolitan regions,” he said.

Some executives also said that the definition of affordable homes must be changed.

“We are also seeking a redefinition of affordable housing. The present limit should be increased from 90 square metres and Rs 45 lakh in terms of space and pricing, respectively,” said Manoj Gaur, CMD at Gaurs Group.

According to the Ministry of Housing and Urban Poverty Alleviation, affordable housing is defined based on property size, price, and buyers’ income.

Affordable housing is a house or flat with a carpet area up to 90 square metres in non-metropolitan cities and towns, and 60 square metres in major cities and valued up to Rs 45 lakh for both.

The Reserve Bank of India, on the other hand, defines it based on the loans given by banks to people for building a house or buying apartments.

“The government must seriously reconsider revising the pricing of homes within the affordable housing budget, taking into consideration city-specific market dynamics,” Puri said, adding that the size of units is appropriate but prices are “not viable across most cities”.

He said that in Mumbai, it would need to be increased to at least Rs 85 lakh.

In other top cities, the budget should be increased to at least Rs 60-65 lakh.

“With such price revisions, more homes would qualify for the affordable price tag, so more buyers can avail of benefits such as lower GST rates at 1 per cent without ITC, government subsidies, etc,” he said.

Dhruv Agarwala, group chief executive officer at Housing.com, PropTiger.com said that the state governments should be “motivated” to reduce stamp duty on affordable housing to make these homes more accessible.

“Introducing interest subsidy programs could incentivise potential homebuyers effectively,” he added.

Some other demands include granting industry status to the sector and raising tax exemption limits on home loan repayments.