Developers eye festival season demand, GST cuts to revive housing sales

Real estate developers expect GST cuts on inputs and festive buying sentiment to spur housing demand across luxury, mid-segment and Tier-2 cities after a lull in sales

Real estate developers are pinning their hopes on the festive season and the cut in goods and services tax (GST) rates to restart the housing demand cycle, with many expecting a spurt in inquiries and sales in the residential segment that has seen a lull in the past two quarters.

 

“By reducing GST on key inputs like cement and steel, construction costs will ease substantially, improving project viability and affordability. This consumer-driven shift will boost demand,” said Zayd Noaman, President, CREDAI Bengaluru.

 

While no direct change has been made in GST rates for this sector, players expect the rise in buyer sentiment to spill over to housing, especially since the festive season is considered an auspicious time for home purchases.

 

“This year as well, the sector is poised to experience a substantial upsurge in the demand for homes, particularly with a flurry of new launches in the luxury segment, attracting HNI and ultra HNI buyers as well as significant investments from the NRI community,” said Aakash Ohri, Joint Managing Director and Chief Business Officer at DLF Homes. He added that the Indian festive season has evolved into the annual high point for residential real estate.

 

“With home loan rates holding steady and high net-worth individuals (HNIs) showing resilient demand, momentum in the top-end segments continues to be steady. A GST cut will also bring in a certain sentiment boost, even though luxury buyers are largely insulated from small price shifts,” said Ashwin Chadha, Chief Executive Officer at Sotheby’s International Realty. He added that the festive season usually brings a 15–20 per cent jump in luxury real estate enquiries.

 

Developers are also expecting the season to expand demand outside metropolitan areas such as Delhi-NCR and Mumbai. Rohit Kishore, Chief Executive Officer for Hero’s realty arm, said the festive season-led surge is not just limited to metros but equally visible in Tier-2 cities such as Mohali and Ludhiana, where growing aspirations are driving more people to invest in quality housing.

 

On the other hand, Sheeshram Yadav, Managing Director at Yugen Infra, noted that the impact of GST is not uniform across the real estate industry. For instance, affordable housing projects already had a minimal tax of 1 per cent and therefore will see no change.

 

However, for mid-housing projects, the cost of construction and the selling price will be down by 3–5 per cent and 1–1.5 per cent respectively, with the tax reductions on cement and other building materials.

 

“With the availability of Input Tax Credit on raw materials now, we can anticipate further price reductions in upcoming projects,” he added.