A slew of favourable announcements in this sector could bring stocks of realty, cement and housing finance sectors to focus.
Credit ratings agency CareEdge expects the government to increase fund allocation to PMAY and schemes focused on affordable housing, calling it vital for sustaining robust housing construction and thereby driving employment.
“The sector now seeks a revival strategy for affordable housing, industry status, and additional tax incentives to further boost demand. A grant of industry status could ease the availability of funds and increase participation from foreign investors,” CareEdge said, adding that the move could revive stalled projects.
The ratings agency acknowledged initiatives taken by the government in the last few years, including increased tax exemptions on housing loan interest, tax relief for transactions up to Rs 2 crore, the ‘Housing for All’ scheme and implementing denotification scheme of SEZ and the SWAMIH scheme for stalled projects.SWAMIH or Special Window for Affordable and Mid-Income Housing was announced by the FM in 2019, where the government cleared a proposal to set up a ‘Special Window’ in the form of AIF to provide priority debt financing for completion of stalled housing projects.Nuvama in a Budget note said it expected more clarity and higher investments in housing for all initiatives. Some sops could be announced to boost affordable housing, it said, adding that the tax incentives may be given to improve affordable housing demand.It also expects the government to revise the upper limit of affordable housing to match rising home prices.
“Additionally, with a view to boost the affordable housing projects, the Government may consider re-introducing the 100% tax holidays on construction of affordable housing to incentivize the builders and proliferate the supply of such housing,” Punit Shah, Partner at Dhruva Advisors said.
Another critical step to drive sustainable growth in the real estate market could be increasing the interest deduction limit on home loans. Currently, the maximum amount of interest that can be claimed as a deduction is Rs 2 lakh per annum for a self-occupied property.
This will make housing loans more attractive to potential buyers and investors, providing a much-needed boost to real estate developers, said Shah of Dhruva Advisors.
Realty stocks have had a strong run on the exchanges over the last one year and the returns by the 10-stock Nifty Realty index has been 103%, significantly outperforming the broader Nifty50 which has delivered returns of 24% in the same period.
Sobha (230%), Prestige Estates (226%), Brigade Enterprises (119%) and The Phoenix Mills (128%) have multibagger returns while Oberoi Realty, DLF, Sunteck Realty, Godrej Properties and Macrotech Developers have given between 63% and 97% returns in the said period.
Aavas Financiers (12%), LIC Housing Finance (104%), Home First Finance (32%), Repco Home Finance (80%), GIC Housing Finance (31%), Can Fin Homes (-4.5%) and HUDCO (418%) are also expected to remain in focus.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)