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How Union Budget 2015 affects property buying sentiments

New Delhi: Union Budget 2015 is at hand and as always, every Indian will be waiting to see what it holds in store for them. The property sector in particular is very sensitive to the

India TV News Desk [ Updated: February 26, 2015 10:32 IST ]
how union budget 2015 affects property buying sentiments
how union budget 2015 affects property buying sentiments

New Delhi: Union Budget 2015 is at hand and as always, every Indian will be waiting to see what it holds in store for them. The property sector in particular is very sensitive to the annual budget, because it has a direct impact on how the common man perceives the viability of purchasing a home.

Every Indian cherishes the notion of owning a home, and every year sees a new segment of Indians entering the stream of employed and salaried individuals who have this aspiration. These individuals are just starting out in their careers, and their purchasing power is at the lowest point. Therefore, they are very sensitive to every factor that influences their current finances.

At the same time, there are those who have already moved up a little further in their careers and have been aspiring to buy a home for a longer time. They have been scanning the market for suitable options and are fairly certain of what they want, and are now awaiting the right combination of factors to help them make the final decision. For the real estate market, this amounts to a very large number of 'fence sitters' - people who are potential buyers but are not committing.

The industry expectation is that after the annual budget is announced, many of these individuals may press the 'commit' button. This is because favourable changes in direct and indirect taxation on individuals can induce greater financial confidence. For example, if the finance ministry raises the individual income tax exemption limit, it will have positive impact on long-term spending and saving patterns. More disposable income increases investment appetite, and property is the foremost investment instrument of choice for every Indian,

Likewise, if the annual budget increases the tax deduction on home loans, it becomes an additional incentive for people to buy homes. The annual budget also impacts the financial confidence of individuals in indirect ways. For instance, if duties on consumer goods are hiked, it affects how middle class people will plan their budgets for the year. If the budget announces additional subsidies for utilities such as cooking gas, it will translate into more disposable income. Changes in service tax and sales tax are also directly related to the annual expenses incurred by middle class households, and therefore affect financial planning of families.

In short, the upcoming budget can play a big role in moving undecided property buyers off the fence. It is not surprising that everyone from developer to end user will be paying close attention to what Finance Minister Arun Jaitley has to offer this year.

(Arvind Jain is Managing Director - Pride Group)

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