Due to Demonetisation, Residential real estate market is slowdown. Though sales have not picked up pace, enquiries have started to come. Builders realised that it is a critical period and coming up with numerous lucrative offers to give a slight nudge to homebuyers. Most of the schemes like heavy discounts and possession linked or payment plan linked etc. Good deals were offered by developers.
Benefits like free maintenance, free first transfer, and 0% processing fee on home loans are also among the offers being floated in the market currently.
Residential realty saw a 15-20% dip in sale volumes in Nov-Dec 2016 due to demonetisation. Both primary and secondary sales were impacted. Investors are expecting that it will take some time for market to regain pace and such offers are being floated to bring back the fence-sitters. But expect a normal real estate market by the end of 2017.
Union Finance Minister Arun Jaitley, who announced Union Budget 2017, has granted infrastructure status to affordable housing. This move is a good boost to real estate sector.
The announcement of affordable housing being given Infrastructure status is a welcome move and will act as a catalyst to meet the objectives of Housing to all by 2022. Credit off-take towards affordable segment of housing will lead to creation of supply especially for both stake holders the first home buyer and developer who will now have access to cheaper funding.
Finance Minister also announced that National Housing Bank will refinance individual loans worth Rs 20,000 crore in 2017-18. On the all-important front of personal income tax, the existing tax rate for incomes between Rs. 2.5 lakh to 5 lakh has been reduced to 5%, and taxpayers in other categories will also save Rs. 12,500.
Key highlights for real estate sector in Union Budget 2016-17:
• Pradhan Mantri Awas Yojana to get Rs 23,000 crore
• Affordable Housing has been given the Infrastructure status
• National Housing Bank to refinance Rs 20,000 crore loans
• No cash transaction above Rs 3 lakh will be allowed
• 1 crore rural houses will be created by 2019
• New FDI policy under consideration
• Rs 2.41 lakh crore has been allocated to boosting infrastructure for transportation
• Total allocation for the infrastructure sector is Rs 3,96,135 crore
• Allocation for National Highways to be at Rs 64,000 crore
• Indra Awas Yojana will be extended to 600 districts
• Holding period for capital gains tax for immovable property reduced from 3 years to 2 years
• Real estate developers to get tax relief on unsold stock as liability to pay capital gains will arise only in the year a project is completed
• Tax break of 1 year post receipt of the completion certificate, for the unsold stock
• Instead of Built up area of 30 and 60 sq meters, the carpet area of 30 and 60 sq meters will be applicable for affordable housing
• Indexation for capital gains shifted from 01-04-81 to 01-04-2001
• Window for availing 3 year profit-linked incentives for start-ups increased to 7 years against 5 years earlier