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.
The government will give a benefit of 2.4 lakh to first-time home buyers with taxable income below Rs 18 lakh a year, which would be a game changer for the sector. The scheme is likely to be informed shortly and will be effective from January 1, 2017. This scheme would be a game changer. The amount is equivalent to the total interest subsidy over a 20-year loan and will be given upfront to the housing financing company, through nodal agencies such as National Housing Bank and Hudco to reduce the outstanding loan. For a 15-year loan, the value of the benefit would be Rs 2.2 lakh.
Affordable housing has become an important sector. For the last two years, the government has been trying to make an environment where affordable housing can be pushed ahead. Home loans should cover stamp duties which are 10% of the cost. It will make it very easy for homebuyers to acquire property since there will have easy access to funds.
Government should help reduce construction costs and suggested SEZ-like structures for affordable housing. When it comes to real estate developers, cost of land is insignificant for affordable housing.