The realtors’ association has advocated for revising the affordable housing threshold, which has been set at Rs 45 lakhs since 2017. This threshold has remained unchanged despite a significant 24% increase in housing prices in India since June 2018, as per data from the National Housing Bank.
Concurrently, inflationary impact and escalating costs of raw materials have deterred real estate developers from investing in affordable housing projects as providing quality homes at the current threshold limit is a challenge.
To address inflation and the soaring housing rates in both metro and non-metro cities, CREDAI has suggested revising the affordable housing threshold. This adjustment would align with current market dynamics, ensuring sufficient availability to meet present and future demand.
“With its significant contribution to the GDP, employment generation, and infrastructure development, the Indian real estate sector looks forward to a supportive budget that addresses certain long-standing challenges and sets the platform for sustainable and sustained growth. Our recommendations are aimed at sustaining demand through a slew of measures including increasing interest exemption for home buyers, reintroduction of CLSS, and steps required to boost Affordable housing,” said Boman Irani, President, CREDAI.To stimulate homebuying, the Finance Ministry should consider allowing unlimited interest deductions for the first self-occupied property or increasing the deduction limit to INR 5,00,000 – to boost real estate investments and spur demand – benefiting the overall market with multiplier effects, the association said.To optimize the effectiveness of the Credit Link Subsidy Scheme (CLSS), the government should consider augmenting allocated funds, streamlining application procedures, and intensifying awareness campaigns.Currently benefiting 25.04 lakh recipients with an interest subsidy exceeding Rs 58,868 crore, the scheme could extend its reach to additional beneficiaries in the EWS, LIG, and MIG income categories through simplified eligibility criteria and enhanced digital outreach efforts.
According to CREDAI, a 20% increase in the subsidy ceiling would enhance accessibility to homeownership for low- and middle-income families. Collaborations with financial institutions to offer reduced interest rates could further encourage participation, ensuring the scheme effectively addresses housing affordability and fosters economic growth.