Friday, 3 February 2017

Affordable housing set for a dream run

2 February 2017

PUNE: The infrastructure status will boost the affordable housing segment with more private players entering this field, which in turn, will boost the stock in Pune. Pune division has recovered from the impact of demonetisation with property registrations rising by 1% in January, compared to October last year.

According to some realtors, first-time property buyers are likely to benefit with the infrastructure status given to affordable housing, which enables developers operating in this segment to raise loans at a cheaper rate like other infrastructure projects. This low cost is expected to be eventually passed on to home buyers who are likely to get homes at cheaper rates.

With the government's housing for all by 2022 being the focus, Credai Pune Metro's Shantilal Kataria said this would draw the best private sector companies to affordable housing in Pune."The additional refinance of Rs 20,000 crore from NHB and lower interest rates resulting from increased liquidity in the banking sector would add to the funds for the sector at lower costs, which would be passed on to the consumers," Kataria said.

The assessment of the carpet area of 30sqm and 60sqm, which will be eligible for tax exemption is another incentive for realtors, but this may not directly help investors as it may mean expensive homes under affordable housing, realtors said.Sachin Kulkarni, managing director of low-cost housing projects Vastushodh, said this announcement is likely to see nearly 80% houses built in the city qualify as affordable housing. "While there will be more affordable housing, in reality, it will not be affordable to majority of the people," Kulkarni said.

A lot of prospective buyers were looking for increase in interest exemptions under section 80C of the income tax act before making a purchase decision. So the budget does not deliver any immediate fillip to fence-sitters.Increasing the tax-free period for builders constructing affordable housing loans from 3 years to 5 years might push more builders to build housing in the segment. However, if it will actually lead to housing cost going down remains to be seen.

"They should probably redefine what is affordable housing now, otherwise, the sector will stand to suffer two years from now," Kulkarni said.Vic-president Credai, Pune Rohit Gera feels that with the uncertainty around budget over, fence-sitters expecting changes in tax structures now have clarity and would translate to home buyers.

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