Budget boost to affordable housing

Proposals in the Union Budget 2017 are unlikely to have much impact on supply and prices in the Greater Mumbai housing market, but will help boost affordable housing supply in the in the notoriously expensive Mumbai Metropolitan Region (MMR), industry experts say.

Pankaj Kapoor, Managing Director of property research firm Liases Foras, said the prices of homes in Greater Mumbai will remain elusive for the regular home buyers. "The average cost of the 2BHK unit in Greater Mumbai is almost Rs 2 crore and above. That is not going to change. However, there will be ample supply in the affordable segment in MMR particularly in Thane, Kalyan, Panvel, etc," he said.

Shailesh Puranik, MD of Puranik Developers, welcomed the Budget. "We are very happy with the budget. It is a game changer budget for the affordable housing segment. More corporate and foreign and private players will come into the housing industry. We will get cheaper loans for the development of projects. We will have more options in the affordable segment. MMR will witness more growth," Puranik gushed.

Manohar Shroff, vice president of Maharashtra Chamber of Housing Industry, Navi Mumbai, welcomed the decision to not impose tax on flats measuring up to 60 sq metres. "Besides, developers do not need to pay the taxes on unsold inventory. There are a lot of good things for real estate. The main focus is on the affordable sector, so the in the coming years, Thane, Panvel and other peripheral locations will witness a lot of construction activity. Now, there will be momentum after a long hiatus in the housing sector," Shroff said. Finance Minister Arun Jaitley on Wednesday also afforded infrastructure status for the affordable housing sector, which will enable such projects to avail associated benefits of that sector.

"The announcement of affordable housing being given infrastructure status is a welcome move and will act as a catalyst to meet the objectives of housing to all by 2022," Puranik said, adding "We feel that this budget 2017 is made for the real estate industry."

The National Housing Bank will refinance individual housing loans of about Rs 20,000 crore in financial year 2017-18. To promote affordable homes, the government has also proposed to amend Section 80-IBA, relaxing the condition of period of completion of the project for claiming deduction from the current three years to five years.

Kapoor said that there is supply of only three lakh housing units each year against the demand of total 1.78 crore units in the major metro cities. "The government decision of imposing 10 per cent surcharge on income between Rs 50 lakh to Rs 1 crore may be a dampener for home buyers," Shroff cautioned.