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Developers hope to sell 2.69 lakh unsold homes in Mumbai Metropolitan Region
DNA  |  February 26, 2019

Sudhir Suryawanshi

After the Goods and Services Tax Council reduced the GST rate on under-construction houses from 12 per cent to 5 per cent and from 8 per cent to 1 per cent for affordable houses, developers expect to sell 2.69 lakl unsold under-construction homes in the Mumbai Metropolitan Region.

 

According to the Liases Foras latest report, 2.69 lakh homes remain unsold in the Mumbai Metropolitan region (MMR) while 1.05 lakh houses remain unsold in Mumbai. As per this research report, it will take nearly 45 months to sell this inventory. With the earlier GST rate, it could have taken 58 months to sell these many houses. However, the real estate sector is still not efficient because of the high unsold inventory.

 

Pankaj Kapoor, MD at Liases Foras said that the reduction in GST for under-construction houses will help recover the sale of such flats. "There will be a stark improvement in sale of under-construction units this will eventually help builders reduce their financial cost, which has been escalated manifold ever since the demand shifted to ready units. The affordable segment constitutes 53 per cent of the demand in terms of units sold annually across 60 cities in India. However, in terms of value it constitutes only 22 per cent," Kapoor added.

 

He said that, "Govt should have kept input tax credit (ITC) at least for normal category of housing that attracts 5 percent GST, not just for the fact that it would have helped the developer to reduce the cost of construction, but more importantly it was making employment of black money in the real estate difficult. Now in the absence of ITC, the trail of invoicing will not be available. I am wondering it has again opened up the scope of black money employment in the sector" Kapoor added.

 

Mr Mayur Shah, MD at Marathon group and Chairman of Maharashtra Chamber of Housing Industry (MCHI) said, "The Government's decision to reduce GST is a big victory for home buyers in all segments. The move will boost demand in the sector and will encourage more buyers to invest in under-construction property reducing the large inventory overhang in the city. More first time buyers will be encouraged to enter the market due to increased affordability."

 

Rajeev Piramal, Vice Chairman and MD at Peninsula Land Ltd said that the GST council's decision is a win-win for both home buyers as well as the Real Estate Industry. "The Government of India's initiative to provide affordable housing for all has got another shot in the arm. The only thing that could have been better is if this was applicable immediately, instead of from 1st April 2019."

 

State Of Affairs

  • As per a report, 1.05L houses remain unsold in Mumbai
  • Study report said it will take 45 months to sell this inventory. Without GST cut, it would need 58 months