Income tax sops offered to first-time home buyers in the Union Budget are more likely to benefit buyers in tier II cities such as Mysore and Mangalore than those looking at buying affordable homes in Bangalore where property prices are very high.
At the most, buyers within the Rs. 25-lakh loan range will be looking at properties costing Rs. 40 lakh or less in Bangalore, and such properties are available only in those peripheral areas that lack infrastructure, real estate industry sources said.
“While they should have fixed the limit at Rs. 40 lakh, relief should have been given for construction materials without which construction cost will not come down,” R. Nagaraj, president of the Confederation of Real Estate Developers’ Associations of India (Credai), Bangalore, told The Hindu .
“Only about 10 per cent of the apartments available now in Bangalore are those that are less than Rs. 30 lakh and these are all in peripheral areas that lack infrastructure,” he said, and added that property buyers in tier II cities were likely to benefit more.
Asked if this sop would boost affordable housing sector in Bangalore, he said: “It may not because construction cost remains the same, but for a little cheaper land. Moreover, how many people would want to go out of the city?”
Acknowledging the unavailability of houses/flats with all amenities within the loan range, a senior official of the State Bank of India said: “On an average, just about 25 to 30 per cent of the total loan applications in Bangalore are for borrowing less than Rs. 30 lakh. The availability of housing units in this range is less and most of them are in far-flung areas.”
He, however, said the benefit would largely accrue to those first-time home buyers in centres other than Bangalore where the average size of home loan was Rs. 10 lakh. He also pointed out that there was also a different interest rate slab for loans up to Rs. 30 lakh.
