On February 1, the Modi Government will present its much-anticipated union budget for the year 2018-19. This is the last full budget of the ruling government before the general elections. Speculations are rife that this will be a populist budget.
In this backdrop, RoofandFloor recently conducted a survey to capture consumer sentiments and expectations from the upcoming budget.
We gave our readers four options and asked them about the factors or changes that will encourage them to invest in real estate. Here’s what you want:
Reduce interest rate on home loans
The majority of respondents voted for a reduced interest rate on home loans.
What we think: While the central bank has slashed rates in the past to boost the Indian economy, banks have more scope to pass on the benefits to homebuyers (SBI recently announced a New Year bonanza for borrowers). But the Indian government lowered its economic growth forecast for 2017-18 to 6.5%, and it looks the prospect of a sluggish economy might push the central bank to take more steps.
Reduce GST rates
Respondents also wished for a reduction in GST rates for real estate.
What we think: As of now, under-construction properties are levied a GST of 12%, which is higher than the previous taxes. Moreover, stamp duty continues to remain in force even after GST implementation, making property buying a costlier affair than before. An overhaul of GST on real estate would be a shot in the arm for the sector.
Reduction in income tax
An overall reduction in income tax secured the third position on the homebuyer’s wishlist.
What we think: A reduction in income tax will result in more disposable income in the hands of consumers and can act as a fillip to the Indian economy.
In fact, India’s largest lender, SBI, asked for pretty much the same in a recent report titled ‘Union Budget: If Wishes Were Horses!’ SBI says, “We believe there is a need to raise the exemption limit to Rs 3 Lakh. Due to such increase in the limit, around 75 Lakh taxpayers will be exempted from income tax.”
Sops for first-time homebuyers
The first-time homebuyer is now looking for incentives to buy real estate at a time when the sector appears shaky with the after-effects of GST, RERA, and demonetisation.
What we think: Some additional benefits for first-time homebuyers can encourage fringe buyers to take the leap and buy real estate.
70% of homebuyers are looking to invest in the next six months!
RoofandFloor’s Union Budget Consumer Sentiment Survey also revealed that about 71% respondents are looking to buy a property in the next six months, while about 29% are still contemplating. For the majority of these respondents, the preferred budget for investment is Rs 40-80 Lakh, followed by properties within Rs 40 Lakh.
The countdown has begun, and the sector is buzzing with huge expectations! But what awaits the real estate sector will only be known when the Finance Minister opens his briefcase on the D-day! So, stay tuned and follow our hashtag #RealtyBudget2018 on Twitter for live budget updates on February 1, 2018!
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