Kishor Pate, CMD – Amit Enterprises Housing Ltd.
The Union Budget has announced that 1 crore rural houses will be created by 2019, and the outlay for rural housing under PMAY is Rs. 23000 crores from the previous Rs. 15000 crores.
This will help address the housing needs of the homeless and those living in ‘kachha’ houses in the rural areas, and potentially help reduce pressure on urban areas if it is in conjunction with employment generation
The total allocation for infrastructure is a whopping Rs. 396135 crores in 2017-18. This is very good news for the real estate sector, as the correlation of infrastructure with real estate growth is a well-established fact.
Affordable housing has finally been given infrastructure status. This will mean cheaper loans for developers of budget housing and significantly boost the Government’s target of Housing for All by 2022.
The Affordable housing has seen a significant change in the Government’s existing scheme, with the qualifying size requirements now changed from built-up area to carpet area of 30 sqm and 60 sqm for projects within the municipal limits of the large 4 cities.
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.
While this will definitely boost the overall consumption story, it, unfortunately, will not have any significant impact on housing demand.
However, the FM did indicate that lending rates are likely to come down in the wake of the demonetisation move. A decline in interest rates would have positive implications on housing demand.