Real Estate

Budget 2023-24 Balanced but Tepid for Real Estate

Union Budget 2023-24 Real Estate

The new measures announced in the Union Budget 2023-24 may certainly help unleash Indian economy’s potential. However, from a real estate point of view, there were no major direct announcements that could be seen as immediate booster shots. 

The enhanced allocation for PM Awaas Yojana by 66% to over INR 79,000 crores is certainly a boost for affordable housing, which was flagging due to increased input costs and also because the buyers in this segment, mostly from the unorganized sector, were still reeling under the impact of the pandemic. It is another step towards the government’s Housing for All mission.

Anuj Puri, Chairman – ANAROCK Group: The Budget 2023-24 lays much emphasis on building the infrastructure of the country, with emphasis on last-mile connectivity. Improved urban infrastructure will provide further impetus to Tier 2 & 3 cities. The unwavering focus on infrastructure will indirectly drive real estate growth over the next one year. The tourism sector also has something to cheer for as the budget aims to boost domestic and international tourism.

As anticipated, the FM also tried to rejuvenate the MSMEs sector which has a multiplier impact on the growth of the overall economy. The revamped credit guarantee for MSMEs and special tax benefits and deductions will provide impetus to overall industrial development, and this can have a rub-off effect on the real estate sector since the pandemic slowed down demand for affordable housing in 2021 and 2022.

Resultantly, new supply in this segment also reduced. As per ANAROCK Research, 2022 saw a trend reversal with the share of new supply in the affordable housing category (<INR 40 lakh) dipping to 20% of total 3.58 lakh units launched in top 7 cities from 40% of 2.37 lakh units launched in 2019.

Changes in the income tax slabs, including exemption for income up to INR 7 lakh under the new tax regime and the new tax slabs, will doubtlessly benefit the middle class. However, whether the housing sector will get a collateral boost remains to be seen. The new tax regime offers no benefits that taxpayers can avail of under any Sections, including Section 80C – the previous home loan tax benefits.

Akash Pharande, Managing Director – Pharande Spaces: The Union Budget 2023-24 was not as beneficial for the residential real estate sector as the industry had hoped. The only announcement with direct implications for the housing sector was the increased allocation for the Pradhan Mantri Awaas Yojana (PMAY). More supply in this segment can benefit the middle class, who form a significant portion of the target audience for this scheme.

One of the major changes is the introduction of a new tax regime, which offers lower tax rates for individuals who forgo exemptions and deductions. However, this regime also foregoes the previous deductions on housing loans – one of the most popular incentives for middle-class homebuyers. This cannot be seen as positive for homebuying sentiment.

The budget has raised the income tax exemption limit from INR 2.5 lakh to INR 5 lakh, and also introduced a new tax slab with a lower tax rate for individuals earning between INR 5 lakh and INR 7.5 lakh. While these do not have any direct correlations to property purchase sentiment, they could be seen as possible sentiment boosters for homebuyers who fall in this tax bracket.

Increased infrastructure allocation was expected, and the FM delivered on it. Infrastructure is a vital catalyst for real estate demand, as it helps open up newer precincts for development. More supply in emerging lower-cost locations helps keep the prices of budget housing in check.

All in all, it is a cautious budget that has not provided any of the boosts which the real estate industry had hoped for.

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I'm Ved Prakash, Founder & Editor @Newsblare Media, specialised in Business and Finance niches who writes content for reputed publication such as,, Motley Fool Singapore, etc. I'm the contributor of different... news sites that have widened my views on the current happenings in the world.


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