Sharad Mittal, Director and CEO, Motilal Oswal Real Estate

Over the last six months, residential real estate has witnessed a strong recovery wherein almost all top cities are clocking record sales as compared to previous years. Customers and investors who had stayed away from residential real estate over the last four to five years are returning to the sector.

While some part of this recovery may be attributed to pent-up demand, developer discounts and temporary stamp duty waivers, a large part of it is on the back of fundamental factors such as multi-decadal low interest rates, bottomed-out pricing creating a room for price rise in future and a general increase in need for owning a home in light of Covid.

Return of this lost demand is imperative to the revival of residential real estate, which has been going through several challenges over the last four to five years due to a spate of regulatory reforms and funding crisis. The upcoming budget should focus on the revival of demand for real estate.

A key measure that can be introduced to boost end-user demand would be to increase eligibility limits on home values for affordable housing benefits from the current Rs 4.5 million to Rs 6 million. The move would expand the benefits of the affordable housing scheme to more homes.

Till 2017, the entire loss from deemed let out properties (second homes and thereafter) could be adjusted with income from all sources. That adjustment incentivised many people to invest in real estate for better tax planning. Restricting this limit to Rs 0.2 million in the 2017 budget created a drop in investor demand. Removing this limit in the upcoming budget would go a long way in bringing back lost investor demand.