DIWALI 2017 V/S DIWALI 2018: THE PARADIGM SHIFT IN INDIAN REAL ESTATE
Diwali, the most awaited festival of the year brings with it a promise of change. During the festival, Indians prepare to be at their best. They make their house look new and wear their best attire. With the constant rhythm of change, this Diwali the Indian real estate market too will see a significant and optimistic change in its business.
Keeping in mind some major decisions taken in 2017 about reforms and regulations concerning the real estate market, 2018 is by far the best year for investing in the sector. From RERA (Real Estate (Regulatory and Development) Act) and GST (Goods and Services Tax) to the interest rebate offered under the Pradhan Mantri Awas Yojana, the government took various crucial steps to increase transparency and restore the lost trust of homebuyers in the real estate market. The upshot of all these efforts is prominently visible in 2018, making it brighter than ever in terms of prospects. All these initiatives have shaped the industry by offering better investment opportunities and transparent deals which has caused a boost in real estate sales.
The Real Estate Regulations and Development Act (RERA) is not only empowering the homebuyers but also increasing transparency in buying or selling property. Courtesy RERA, the Indian real estate market has become more transparent and investor-friendly. It has put an end to unscrupulous activities by builders and developers, stopped fraudulent activities and project delays, and aims to protect the buyer’s interest. Consolidation of small builders with large names is also seeing significant growth after the emergence of RERA.
Goods and Services Tax (GST) is a ground-breaking tax reform that brought uniformity in the nation’s economy and taxation system. Implemented in July 2017, the effect of GST is clearly visible in the Indian real estate market this year. Taxes which are levied on different materials and services are subsumed under the CGST and SGST. This has not only brought transparency in the real estate taxation system but has also decreased money spent on taxes by 30%-40%. Indian real estate has gained back the lost confidence of homebuyers and even attracted domestic and foreign investments due to the uniformity in the taxation system.
The Real Estate Investment Trusts (REIT), approved by the Securities and Exchange Board of India (SEBI) has attracted more investments this year. People from domestic as well as the international sphere are seen investing their money into the real estate market. The increased transparency, diversification of investment, and lower risks with higher returns are some of the factors that have made investors more confident this year.
Various government programs and schemes like the Pradhan Mantri Awas Yojana and Housing For All By 2022 have also driven affordable housing in the real estate market.
The overabundance of liquid assets available in the banking system has allowed the Reserve Bank of India (RBI) to alter the lending rates. As a result, the home loan interest rates that were listed at 9.5% in 2016, have now been soaring between 8.3–8.4% causing a decrease in interest rates. Following which the equated monthly installment (EMI) costs have become more considerable than ever, enabling homebuyers to take advantage of affordable home finance, and eventually become a property owner.
The paradigm shift in the momentum of Indian real estate is due to a lot of futuristic decisions taken by the authorities in our country. Going by the current trend in the sector, capital values are expected to further move northward making investments more favourable with higher returns. Let us hope that the next Diwali sees more prosperity and growth in the sector.