They say when it rains, it pours and this adage definitely applies to the month of August when it comes to the housing sector as well as home seekers. Describing the announcements as a double boost for housing sector, Anuj Puri, Chairman, ANAROCK Group, pointed out that ‘a steady repo rate and indexation benefits drive market optimism.’
“The RBI's decision to keep repo rates unchanged at 6.5% for ninth consecutive time aligns well with yesterday's announcement on indexation benefits. It sets a positive tone for the housing industry. Maintaining interest rates offers consistency in borrowing costs, which will prompt more aspiring homebuyers to consider taking the plunge - and thus drive demand in the housing market. With interest rates staying steady, EMIs will remain manageable for current and potential homeowners, potentially leading to increased home sales - particularly in the price-sensitive affordable segment.”
He also underlined that the announcement regarding indexation brings tax advantages for property investors, as it permits adjustments to the purchase price keeping inflation in mind, reducing capital gains tax burdens upon property sale.
“This provision increases the appeal of real estate investments, which will spur demand and capital flow into the housing sector. These combined actions bolster investor trust and position real estate as an avenue for long-term wealth growth. As housing demand rises due to favourable interest rates and taxation, we can expect overall boosted growth. This will encourage more project construction, job opportunities and broader economic gains. The collective impact of these measures improves affordability levels and boosts demand dynamics in India's housing segment,” he explained.
G Hari Babu, National President, National Real Estate Development Council (NAREDCO), opined, "The RBI's decision to keep the repo rate at 6.5% and maintain the GDP growth forecast at 7.2% for FY25 creates a stable environment for the real estate sector. With steady borrowing costs, home loans become more affordable, which is likely to boost demand in the housing market, especially during the upcoming festive season. This stability allows developers to plan projects confidently, knowing that financing conditions will remain favourable. The RBI’s balanced approach to economic management helps maintain market confidence, reassuring investors amidst global economic uncertainties. This period of steady rates can be leveraged by the sector to drive growth, innovation, and increased transactions, making the festive season an ideal time to capitalize on market opportunities and support economic expansion."
Jitendra Mehta, President, CREDAI-MCHI Thane, "Thane’s real estate reacts positively to the Reserve Bank of India’s decision to keep the repo rate at the level of 6.5%. Thane’s real estate industry appreciates the government's commitment to ensuring rate stability, it will help maintain growth in real estate and infrastructure. CREDAI-MCHI Thane expects this decision to further stimulate demand in the housing market, particularly in the mid-segment category, which is crucial for the overall growth and development of Thane’s real estate.”
“Thane’s real estate has been witnessing a steady growth in the affordable luxury segment, and the current rate stability should help sustain this momentum. Home buyers will continue to benefit from the favourable lending rates, encouraging more investments in the housing market. We welcome the balanced approach in policy, which maintains liquidity and supports financial institutions while balancing inflation. CREDAI-MCHI Thane also looks forward to the Government to consider further supportive measures which would enhance liquidity and provide long-term stability to the sector," he added.
Prashant Sharma, President, NAREDCO Maharashtra, emphasised, "We welcome the amendment to the Finance Bill by Finance Minister Nirmala Sitharaman, providing taxpayers with the flexibility to choose between a 12.5 per cent Long-Term Capital Gains (LTCG) rate without indexation or a 20 per cent rate with indexation for property acquired before July 23, 2024. This decision is a significant relief for the real estate sector, which has been concerned about the potential impact of the indexation proposal introduced in Budget 2024."
According to him, the ability to select the more favourable tax computation method ensures that home owners and real estate investors are not unduly burdened by changes in tax regulations. "This move by the government reflects an understanding of the complexities within the real estate market and its importance to the overall economy. We believe this amendment will help maintain investor confidence and support the sustained growth of the real estate sector, benefiting not just developers, but also homebuyers and the larger economy," he said.
Pritam Chivukula, Vice President, CREDAI-MCHI, stated, "The recent amendment proposed by Finance Minister Nirmala Sitharaman is a welcome relief for the real estate industry. This balanced approach not only addresses the concerns raised by stakeholders but also provides homeowners with flexibility in managing their tax liabilities. This move will encourage continued investment in real estate, providing stability and fostering confidence among both developers and homebuyers. We commend the government's decision and look forward to continued collaboration to support sustainable growth in the sector."
The dual dose of benefits is much appreciated by all real estate industry stakeholders and seems to be right in time to boost market sentiments with the auspicious Ganeshotsav festival just around the corner!
