The Indian housing sector is in a sweet spot now, as the thrust given to housing has been extremely beneficial not only for developers but also homebuyers and lenders. Flagship government schemes like Pradhan Mantri Awas Yojana and developments such as granting of infrastructure status to affordable housing, 100% tax exemption on profits for developers building affordable homes, implementation of RERA, and the subsidy schemes for first time buyers of residential property are expected to create supply as well as help satisfy housing demand and improve urban infrastructure.
Though there has been a minor increase in interest rates recently, they are still quite low compared to 2011-12. The prevailing rate of interest at HDFC is 8.55% for home loans up to ₹30 lakh. A borrower is eligible for tax deduction of ₹2 lakh on the interest paid on home loans under Section 24B and ₹1.5 lakh on principal paid under Section 80C. This could reduce the effective interest rate on the loan to less than 4%.
The schemes for EWS and LIG are available up to 31 March 2022 and for MIG up to 31 March 2019. Also, the latest decision to relax the eligibility criteria by increasing the carpet area to 160 sq mt for MIG-I and 200 sq mt for MIG-II reflects the government’s intent to encourage home buyers, especially in smaller towns. With property prices steady, low interest rates, higher income levels, huge subsidies for firsttime buyers, fiscal benefits, expected economic growth, etc, this is perhaps the best time for an end
Source:Times of India