New Delhi, 15th January 2025: The Confederation of Real Estate Developers' Associations of India (CREDAI) today shared a list of recommendations for the upcoming Union Budget 2024-25, aimed at boosting the Indian real estate sector and addressing critical challenges across segments. While CREDAI has been steadfast in advocating for Affordable Housing and encouraging its members to work towards fulfilling the aspirations of homebuyers, there are pressing concerns that the apex body has urged the Government to address in its representations.
The number of projects offering affordable housing units has steadily decreased over the years. According to an industry report, the supply of affordable housing in major cities dropped from 26 per cent of total launches in 2021 to just 17 per cent in 2024 (first nine months of 2024). Another report by an Industry body and a real estate consultant claimed that India has an existing shortage of 10.1 million affordable housing units which is estimated to grow to a cumulative 31.2 million units by 2030. This decline in supply highlights the urgent need for the Government to increase the affordable housing price threshold to reflect current market realities, particularly in Tier 2 and 3 cities, where the demand for affordable housing remains high. Additionally, CREDAI has emphasized revising the affordable housing definition to align with evolving market dynamics, enhancing financial accessibility through targeted incentives, and streamlining tax structures to boost developer and buyer confidence. Furthermore, CREDAI underscores the importance of the Government’s continued focus on infrastructure development, which is expected to significantly boost both commercial and residential real estate demand. The association is also hopeful of further allocation of funds to accelerate infrastructure projects, enabling balanced urban development and improving connectivity, which are key drivers of real estate growth. Through these recommendations, CREDAI seeks to address India's burgeoning housing demand, foster economic growth, and solidify the real estate sector's pivotal role in India's journey to becoming an $8 trillion economy by 2029.
Key Highlights of CREDAI’s Recommendations:
Increasing Affordable Housing Threshold
With prices in the real estate sector increasing by over 50% since the affordable housing definition was introduced in 2017, CREDAI has urged the Government to revise the existing cap of ₹45 lakhs. As per the NHB data, there is an increase of 38% in housing rates since June 2018 in India. CREDAI recommends delinking unit prices from the carpet area criteria/definition and suggests updating the thresholds to 70 sq. mtr for metro cities and 90 sq. mtr for Tier 1 and other cities. These adjustments aim to incentivize developers to focus on affordable housing projects while making homeownership more accessible to a broader range of income groups.
Lower Income Tax Rate on Affordable Housing Projects
To boost the supply of affordable housing, CREDAI recommends extending the lower 15% income tax rate, currently available to manufacturing companies, to affordable housing projects. This measure would incentivize developers to increase their focus on affordable housing developments, thus bridging the housing gap.
Introduction of the Credit Guarantee Scheme
To enhance homeownership opportunities for low- and middle-income groups, CREDAI has proposed introducing a Credit Guarantee Scheme. The scheme should cover housing loans up to ₹70 lakhs and home improvement loans up to ₹30 lakhs. This initiative would reduce the risks faced by lenders, curtail reliance on high-cost private financing, and significantly improve financial inclusion in the housing market. Increased Interest Deduction for Homebuyers
To stimulate demand in the residential real estate sector and support the Government’s “Housing for All” mission, CREDAI recommends increasing the interest deduction limit for housing loans from ₹2 lakhs to ₹5 lakhs under Section 24(b) of the Income Tax Act. Furthermore, the association suggests extending these benefits to homebuyers under the new tax regime (Section 115BAC). These measures are expected to bolster homebuyer sentiment and drive greater investments in the housing market.
Amendment to Section 80C for Housing Loan Principal Repayment
CREDAI has proposed increasing the deduction limit for the principal repayment of housing loans under Section 80C or introducing a separate deduction for the same. The association suggests allowing a deduction of up to ₹5 lakhs for the cost of the first self-occupied home to encourage homebuyers to invest in real estate.
Mr. Boman Irani, President, CREDAI, remarked, “With its immense contribution to GDP, employment generation, and infrastructure, the Indian real estate sector has always been at the forefront of nation-building. Currently influencing approximately 53% (directly and indirectly) of India’s GDP and employing over 8 crore individuals, this sector holds the key to addressing the housing needs of 40 crore Indians who lack adequate homes. With a vision to provide 7 crore homes in the next 7 years and generate 2 crore new jobs, our recommendations for Budget 2025 aim to address long-standing challenges and unlock the sector’s true potential. We are confident these measures will catalyse growth, empower homebuyers, and support India’s economic ambitions. We look forward to collaborating with the Government to create an enabling environment for the sector, ensuring that it remains a cornerstone of India’s economic progress.”
With the anticipated cut in the repo rate in the first quarter of FY 2025, coupled with the implementation of CREDAI’s recommendations, the affordable housing sector is poised for a significant boost. These measures, designed to stimulate both supply and demand, will play a crucial role in sustaining the growth trajectory of India’s real estate market.
About CREDAI
The Confederation of Real Estate Developers' Associations of India (CREDAI) is the apex body of private Real Estate developers in India, established in 1999, with a vision of transforming the landscape of Indian Real Estate industry and a mandate to pursue the cause of Housing and Habitat. Today, CREDAI represents 13000+ Developers across 230 city chapters in 21 states and plays an important role in policy formulation by representing the views of its members to various Ministries at regular intervals.