This year has been a trail-blazing year for Indian real estate after a landmark 2017 which saw major legislation like RERA implemented. In post-RERA 2018, the realty sector has moved forward with more reforms and complementary market changes which have boosted performance for the better. Let’s take a look at some of these developments during 2018:
Unchanged Repo Rate
By leaving the repo rate unchanged just before the festive season in October this year, the RBI provided a much needed boost to the real estate sector. An unchanged repo rate means banks’ lending rates continue to remain attractive and thus boost buyer sentiments. The festive season is a time when many Indians plan to invest in homes by also taking advantage of numerous festive home buying offers.
The continued rise of the American dollar this year has meant that most other currencies have depreciated in value against it. For an emerging country like India this has meant a steep depreciation of the Rupee to it’s all time low of 74 against the dollar. However, this also makes investment in the country’s real estate sector more attractive to NRIs, thus boosting buying sentiments among this section of investors.
RERA has made it mandatory for developers to take title insurance which protects investment in real estate and provides coverage against financial loss arising in case of title disputes. This is a common form of indemnity available in Britain, Canada, Australia and Europe which promotes transparency.
Increased Carpet area of PMAY- U Homes
This year the government increased the carpet area of residential units eligible for interest subsidy under the government’s Credit Linked Subsidy Scheme (CLSS) for the middle-income group (MIG) under PMAY (Urban). This brings more homes under the scheme and increases the choice available to homebuyers who would previously decide against buying a home under the scheme due to the limitation in sizes. This is a boost to residential sales and investment in affordable housing.
Mumbai DP 2034
The Mumbai Development Plan 2034 envisages a revamped Mumbai with a big boost to real estate. It proposes increased FSI which will provide more commercial and residential units in the city. The plan also proposes to unlock 3,734 hectares of no development zones (NDZ) which will be used for development of affordable housing and increased social amenities such as parks, playgrounds and gardens. The city is expected to benefit from more green zones, homes and jobs.
2018 emerged as the year where more buyers preferred to purchase plots due to their lower prices and relative affordability. It offers them the freedom to buy a plot and build a home as per their needs. This trend has prompted a number of organized developers to also launch various plotted developments across Bangalore and Chennai realty markets. A number of plotted developments come with numerous amenities such as clubhouses, paved roads, water and electricity connections, and drainage systems making them more attractive.
Another trend this year has been the sale of ready-to-move-in homes. Ready or completed projects come with the benefits of having all the amenities and supporting infrastructure in place as opposed to investing in an under-construction property and waiting for completion. As a result more homebuyers preferred to purchase ready-to-move-in homes across cities and markets.
Lower Circle rates
Budget 2018 offered relief to buyers and sellers of property by proposing a tax relief up to 5% of the Circle rate. By allowing the 5% variation between transaction value and circle rates for computation of capital gains the secondary real estate market has received a boost.
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