Boosting Affordable Housing: Expectations from Budget 2024 for the Realty Sector
The real estate sector is pinning its hopes on Budget 2024 to revive the affordable housing segment, which has been struggling since the pandemic. Here are the key expectations from the sector.
Real EstateAffordable HousingBudget 2024Pradhan Mantri Awas YojanaSwamih FundReal EstateJul 10, 2024
Despite the pandemic, the premium housing segment has been doing well, but the affordable housing segment has been struggling. The government's commitment to providing affordable housing to the needy is evident from the plans announced by the new cabinet to construct an additional three crore rural and urban houses under the Pradhan Mantri Awas Yojana (PMAY). The Ministry of Housing and Urban Affairs has also announced plans to revamp the PMAY (urban) scheme to make it more effective.
The real estate sector is expecting the government to take three key steps to rejuvenate the affordable housing segment. Firstly, it wants the government to revisit the definition of affordable housing, which is currently based on a broad categorization. The sector wants the government to consider city-specific market dynamics, as the current price tag of ₹45 lakh is low for cities like Mumbai.
Secondly, the sector is expecting the government to reintroduce a 100% tax holiday on the construction of affordable housing, which will incentivize builders and increase the supply of affordable housing. Additionally, the sector wants the government to revive the Credit-Linked Subsidy Scheme (CLSS) under PMAY, which can increase demand for affordable housing significantly.
Thirdly, the sector is expecting the government to increase the allocation and introduce the second tranche of the SWAMIH (The Special Window for Affordable and Mid-Income Housing) fund with a corpus of ₹50,000 crore in Budget 2024. This will facilitate the completion of stalled projects by ensuring adequate liquidity.
Apart from these industry-specific measures, the sector is also expecting a rebate in income tax rates, additional benefits on home loans, and steps to incentivize developers for the construction of affordable housing. These measures will give a much-needed boost to the segment and help achieve the government's goal of providing affordable housing to the needy.
Information
The real estate sector has been witnessing a contrasting trend in the premium and affordable housing segments. While premium housing is selling well, the affordable housing segment is struggling to see demand. According to Anarock Research, the sales share of affordable housing has come down significantly after the pandemic. The sales share of the segment declined from over 38% in 2019 to 26% in 2022.
Anarock Research is a real estate consultancy that provides research and analytics services to the sector. The Ministry of Housing and Urban Affairs is responsible for implementing the Pradhan Mantri Awas Yojana (PMAY) scheme.
Frequently Asked Questions
What is the current definition of affordable housing?
The current definition of affordable housing is a house having a carpet area of up to 90 sq m in non-metropolitan areas, and 60 sq m in major cities with a value of up to ₹45 lakh.
What is SWAMIH Fund?
SWAMIH (The Special Window for Affordable and Mid-Income Housing) fund is a corpus of ₹50,000 crore aimed at facilitating the completion of stalled projects by ensuring adequate liquidity.
What is Credit-Linked Subsidy Scheme (CLSS)?
CLSS is a scheme under PMAY that provides subsidies to homebuyers, which can increase demand for affordable housing significantly.
What is the sales share of affordable housing in 2022?
According to Anarock Research, the sales share of affordable housing declined to 26% in 2022.
What is the government's goal for affordable housing?
The government's goal is to provide affordable housing to the needy, as evident from the plans announced by the new cabinet to construct an additional three crore rural and urban houses under the Pradhan Mantri Awas Yojana (PMAY).
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