Uncertainty over new GST rates for under-construction properties and transition to new rates from April may impact realty sales towards FY19-end, Kotak Institutional Equities report said.
Uncertainty over new GST rates for under-construction properties and transition to new rates from April may impact realty sales towards FY19-end, Kotak Institutional Equities report said. The sales also being delayed by the buyers to see how revision of GST rates evolves from next month onwards, the report also said.
“We would see headline sales numbers for real estate sector in India moderate in February and March 2019, as consumers were postponing sales to see the outcome of revision in GST rates, which have been reduced with effect from April 2019”, the report said.
“Residential real estate sales saw some moderation in January 2019 (-4.6% yoy) that will likely accelerate in the succeeding two months up to March 2019 owing to the change in GST rates applicable from April 2019,” report also said.
The new launches have plunged significantly during the period and the trend is expected to sustain itself in the coming months considering weak liquidity in the system, the report added.
In its 33rd meeting, GST Council had cut rates on normal under-construction properties to 5 per cent from 12 per cent. In the affordable segment, the rate has been set to 1 per cent without income tax credit (ITC).
There are almost 6 lakh under-construction homes that are unsold in the top seven cities, according to industry estimates. Of these almost 35 per cent are priced below Rs 40 lakh. Since the GST Council defined affordable housing as those within 45 lakh budget, more properties qualify under this segment.