The government this year announced tax deductions on interest amount of home loans below Rs 45 lakhs availed for the first-time homebuyers.
Dwindling consumption, lacklustre investment appetite and global slowdown has brought down growth in real estate sector, according to a report. Housing sales in 2019 saw a modest 4-5 percent annual growth. According to an ANAROCK Property Consultants report, over 2.58 lakh homes were sold during the year against 2.48 lakh housing units sold in 2018.
However, affordable housing remained upbeat in 2019 thanks to multiple government sops throughout the year. The government this year announced tax deductions (amounting to Rs 3.5 lakh in a year) on interest amount of home loans below Rs 45 lakhs availed for the first-time homebuyers. Luxury and ultra-luxury segments remained limited to end-user interest, with no serious investor activity.
However, new housing launches in 2019 saw a 18-20 percent annual growth with new launches in the region of over 2.3 lakh units (1.95 lakh units were launched in 2018). Anuj Puri, Chairman, ANAROCK Property Consultants said: “Multiple developers fell off the grid while others still struggle to stay viable. However, strong players with healthy balance sheets - in many cases diversified beyond real estate - sailed through 2019 and recorded decent housing sales and revenue growth.”
“Towards the end of 2019, more than 72 percent ( about $47 bn or nearly Rs 3.3 lakh crore) of the total loans advanced to Grade-A builders ($65 bn) are safe and stress-free. Grade B and C developers collectively accounted for only $28 billion of the total loan advances,” Puri said.
Amidst gloom, the government gave real estate major shots in the arm in the first leg of its second term in office. There were concerted attempts to revive the economy while simultaneously addressing challenges in the struggling automobile, real estate and retail industries, the report said.
The government had created an alternative investment fund of Rs 25,000 crore for last-mile funding of stalled housing projects, cut corporate taxes and relaxed FDI norms further for single-brand retail and mandatory 30 percent domestic sourcing.
First Published: IST