Residential real estate, for a very long time, has been the subject of discussion with regard to its value and business output in India. Usually favoured by several big developers across the country as a ‘robust sector’, it has witnessed its fair share of ups and downs in the overall market.
The Present Scenario
In the recent past, housing demand in the country has been on an all-time high, helping with the swift comeback of residential real estate. A number of factors have contributed to this staggering growth, including an increase in the disposable incomes, rapid urbanisation, a rise in the number of nuclear families, and increasing monetary benefits, especially for working professionals.
The growth forecast of residential real estate, in particular, is indicating positivity, for developers as well as buyers. As per the research conducted by experts in the industry, real estate in India is expected to become a $1-trillion market by the year 2030.
Introduction of GST and RERA
The primary reason for this growth trajectory in residential real estate has been the introduction of policies like RERA in 2016, and the implementation of GST in 2017. While they were initially perceived by players in the market as chaotic developments, their long-term contribution to the growth of the real estate market is now being acknowledged and lauded. As structural reforms, they have been streamlining and organising the sector to ensure transparency, consolidation, and boost overall growth and colossal investments.
Individually, GST is doing its fair bit to transform the residential market for the greater good, by making developers more transparent and accountable by simplifying the tax structure and ensuring greater compliance. In fact, with the implementation of the GST cut w.e.f. 1st April 2019, further streamlining of the market along with growth in housing demand is foreseen by experts. More importantly, there is immense potential to revive buyers’ sentiments with the GST Council revoking the Input Tax Credit system.
Similarly, RERA to a large extent has also aided the otherwise fragmented residential market by encouraging those looking to purchase a home by accelerating the ‘project completion’ process within the promised time-frame. While this vision is still in progress, it is a huge step towards the positive transformation of the sector in the long haul.
The Affordable Housing Initiative
The next biggest initiative that has contributed to the residential market boost is Affordable Housing, by the ruling Indian government. Incentives as part of the same have been aiding in the recovery of the overall sector, by augmenting housing supply. Developers have been investing a lot more into infrastructure and better connectivity, thereby fortifying this progress.
The government’s ‘Housing For All by 2022’ vision as part of Affordable Housing is expected to be the key catalyst of it emerging as the most powerful segment in the residential real estate market in the near future, with the biggest developers heavily investing in it. The segment contributing to 41% of new supply in 2018 serves as a testament to this market forecast.
Moreover, under the Pradhan Mantri Awas Yojana scheme, the government has provided greater impetus to the residential sector by extending the credit-linked subsidy scheme till March 2020. This has been the biggest respite for Economically Weaker Section (EWS), Low Income Group (LIG) and Middle Income Group (MIG), by providing interest subsidies on home loans. It has also helped define housing units within Rs 45 lakh as affordable housing, thereby not only widening the scope of the segment, but also fuelling housing demand.
What the Future Holds
All of these well-defined policies, initiatives and incentives, combined with the changing dynamics of the nation’s population make for reflection of greater developments in the real estate industry. With student housing on an all-time high, coupled with the government’s continued efforts with regard to the affordable housing initiative, the real estate industry in India is primed for a magnificent comeback. Moreover, with the rising number of the young working population, there is an ever-growing demand for housing, thereby affirming the immense potential for residential real estate to hold its own as a lucrative market for investment.