Flat Response
THE BUDGET HAS LITTLE TO PUSH DEMAND IN THE REAL ESTATE SECTOR
THE REAL ESTATE SECTOR, WHERE SLUGGISH demand resulted in flat sales in calendar 2019, was expecting a budget to boost demand, but it was not to. “It has been a huge disappointment for the real estate sector, especially after high expectations prior to the release of the budget,” says Gulam Zia, executive director of property consultancy Knight Frank India. The government did lower income tax rates for income up to Rs 15 lakh, but only if the taxpayer was willing to forgo all exemptions. It’s a move that is unlikely to stimulate demand as the exemption on home loan interest and principal is a huge incentive to take loans to buy a house.
“Apart from the affordable housing push and personal tax relief, no major benefits came in to resolve the current housing mess,” says Anuj Puri, chairman, Anarock Property Consultants. “A hike in the Rs 2 lakh limit deduction on housing loan interest could have kickstarted healthier demand for housing, especially in the affordable and mid-segment categories.” And though the government spoke of enhancing the partial credit guarantee scheme for NBFCs to ease credit for real estate, it may be insufficient. Project delays are the biggest fallout of a cash crunch.
Experts, however, do welcome the proposal to extend the tax holiday on profits developers earn. The government has also extended the Rs 1.5 lakh benefit on interest on affordable housing loans. The problem is: it is not likely to spur demand that could lift the sector out of the current mess.