Sale of affordable housing may go up
A day after the budget, the industry estimated the sale of affordable homes could increase up to 20 percent this year because of the additional exemption granted to the first time buyers. This benefit is for property which doesn’t exceed Rs 40 lakh.
In the Budget it is said that, in 2013- 2014, the first time buyers, who avail a loan of up to Rs 25 lakh for a property value of Rs 40 lakh will be eligible for an additional interest subvention of Rs 1 lakh. Currently, a tax rebate of up to Rs 1.5 lakh is available.
Due to the budget announcement, luxury housing might impact marginally. This is about a provision related to property worth over Rs 1 crore. The rate of abatement on homes and flats of above 2,000 sq ft, or costing Rs 1 crore and above, has been reduced from 75 percent to 70 percent in the Budget.
According to analysts and consultants, of the total real estate residential supply in India, 15 to 20 percent is affordable segment, luxury accounts for 15 to 20 percent and little more than 50 percent are mid segment residential properties. The sales of affordable housing will go up in Tier II ans Tire III cities.
In the National Capital Region (NCR), some parts of Greater Noida and the Yamuna Expressway will see the increase in sales.
Home buyers in Bangalore, Pune, Noida, and Tier-II cities such as Nagpur, Jaipur and outskirts of metros where home prices are affordable might stand to gain. For instance, if a person buys a 600 sq ft flat at Rs 4000 per sq ft in Bangalore, he can get the benefit of the Rs 1 lakh additional deduction from income tax.
Another real estate executive said that, this changes will have hardly one to two percent impact on the over all cost. For a high value property, this will hardly have any implications.
According to a real estate expert, the benefit will motivate property buyers in small cities. It was said that there will be some benefits in selected locations like Noida Extension in the NCR, but there won’t be any benefits in markets such as Mumbai.
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Affordable Housing, Apartments in India, Budget 2013-2014, Housing sector, Increase in Service Tax, Luxury homes, Private equity funds, Real Estate Sector, Realty News, Service tax on construction, union budget
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