Housing sales rebound to 90% of pre-COVID levels in 2021

Housing sales rebound to 90% of pre-COVID levels in 2021

Housing sales in the top seven cities rebounded to 90% of pre-COVID levels and new launches reach new levels in 2019 as a result of the strong comeback in the Indian residential sector in 2021, with housing sales in the top seven cities reversing to pre-COVID levels.

While the housing sector's prospects look upbeat in 2022, it remains to be seen to what extent the new COVID 19 variant Omicron will affect real estate activity.

It hasn't had a seriously dampening effect so far. Policy support was a big factor in the sentiment revival in residential real estate during the worst parts of the first and second waves.

The RBI and the government have aided the sector with various demand boosters. The tax benefits extension on affordable housing in the budget last year was a strong move that made a difference.

The RBI kept the repo rates unchanged for the last nine consecutive bi-monthly monetary policies, giving the benefit of lower interest rates to homebuyers. During a very rough time, these measures helped the housing sector, which plays a significant role in the overall economy.

The residential sector looks forward to further support beyond the mainstay demands of industry status, easy availability of finance, and GST rates reduction.

With regards to the upcoming Union Budget 2022 - 23, some significant moves that would spur residential demand include :

The tax rebate on housing loan interest rates is required to be hiked to at least Rs 5 Lakh under Section 24 of the Income Tax Act. This could immediately infuse robust demand for housing, especially in the affordable and mid-segment categories.

Deductions for home loan principal repayment, over and above the existing 80 C: Personal tax relief, would be a welcome move - especially since the last increase in the deduction limit under Section 80 C to Rs 1.5 lakh a year took place in 2014.

The Ministry of Housing and Urban Poverty Alleviation says affordable housing is defined by the size of the property, the price, and the buyer's income. Affordable housing is a unit with a carpet area up to 90 sq. m. in non-metropolitan cities and towns, and 60 sq. The value of the m. in major cities was up to Rs 45 lakh for both. On the other hand, the central bank's definition is based on the loans given by banks to people.

The government should consider revising the city-wise pricing parameters to include a broader customer base under the benefits extended to this segment. With this price revision, more homes will fall within the affordable price tag, allowing more buyers to avail of multiple benefits, like lower GST rates at 1% without government subsidies and the tax deduction of a total of Rs 3.5 lakh on interest repayment of home loans.

The government extended the period for additional deduction of Rs 1.5 lakh for loans up to March 31, 2022 to include the benefits of Affordable Housing: Affordable and rental housing was a big boost in the last Union Budget. There will be a boost to demand for affordable housing in 2022 because of the extension of this benefit.