Incentives on affordable housing a key factor behind property market revival in India: Report
43% of the total housing sales in India’s eight leading housing markets was within the price bracket of Rs 45 lakh, a cap essential to avail of certain government subsidies on home purchase in India.
Policy support from the government fueled the attraction for affordable homes in India in 2021. This, in turn, helped the world’s second most populous nation register a jump in annual housing sales as well as supply, as per PropTiger.com.
In fact, 43% of the total housing sales in India’s eight leading housing markets was within the price bracket of Rs 45 lakh, a cap essential to avail of certain government subsidies on home purchase in India. According to a report by PropTiger, titled Real Insight Residential – Annual Round-Up 2021′, home sales in India’s eight prime housing markets increased 13% in 2021, when compared to the overall sales in 2020.
Under Section 80EEA of its income tax law, India offers its first-time homebuyers an additional tax deduction of Rs 1.50 lakh if the unit is worth up to Rs 45 lakh. Such a borrower can also claim subsidy under the Pradhan Mantri Awas Yojana Programme (PMAY).
In a country where housing ownership has traditionally been important for families, the concept has gained further currency after the coronavirus pandemic where the importance of one’s home as one’s only real safe haven became evident. During the pandemic, even the younger millennials and Gen Z, who are more inclined towards rental properties, recognised the value of home ownership.
According to PropTiger.com, the up to Rs 45-lakh-price bracket also contributed 41% to the annual new supply in these eight markets in 2021. A total of 2.14 lakh units were launched in 2021 in these markets compared to 1.22 lakh units in the preceding year, showcasing an upward swing of 75%.
The residential markets covered in the analysis include Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Delhi-NCR (Gurugram, Noida, Greater Noida, Ghaziabad and Faridabad), MMR (Mumbai, Navi Mumbai & Thane) and Pune.
“In addition to government subsidies, record low home loan interest rates too have been a great driver of home sales in the country in 2021 even as the economy slowly recovered from the shock of the second wave of the pandemic during the year. We expect to see more intense activity in the housing market in 2022 especially in the affordable homes segment as various deadlines to avail of the government subsidies near the end,” said Dhruv Agarwala, Group CEO, Housing.com, PropTiger.com & Makaan.com.
“In light of the fact that the affordable housing segment is highly crucial for the overall growth of the housing sector in India, we hope that the government considers extending these deadlines to maintain the recovery momentum in India’s second largest employment generating sector,” Agarwala added.
“The Central government’s Rs 48,000-crore outlay to augment the supply in the affordable housing segment in both rural and urban areas is a welcome step which will accelerate the vision of ‘Housing for all’. However, apart from boosting the supply, there is also a need to boost the demand in the segment through tax rebates, stamp duty waivers and by increasing the capping for homes to qualify as affordable homes in metro cities to further incentivize homebuyers,” said Ankita Sood, Head and Research Housing.com, PropTiger.com & Makaan.com.