Real Estate business of Pune are looking forward to the forthcoming Union Budget 2012 an expectation that will contain some pragmatic provisions that will lower down the effective price barriers for home seekers.

As said by Real Estate developers Pune city continues to face problems including high mending rates and construction costs, lack of an affordable housing and insufficient infrastructure. Development of an affordable housing are needed to encourage more developers to become active in this sector and increase the supply of budget homes in Pune.

Vice President of CREDAI (Confederation of Real Estate Developers Associations of India) Mr. Anil Pharande said – on a macro level, a higher allocation of infrastructure funds for residential property in Pune can be a favorable approach. Government can set clear guidelines on timely commencement and completion of residential projects and link disbursement of these funds with adherence to these guidelines.

Removal of the 10% service tax on residential property in Pune which increases the cost of new homes by much of 3% is critical for a cost for a cost-sensitive market like Pune which has a sizeable lower mid-income segment. 1% interest rate subsidy on home loans can also work as good measure to bring an affordability and that the present eligibility limit of loan amount of Rs 20 Lakh should be raised to 30 Lakh. This step will help people to think about buying an apartments of decent sizes. Reducing the taxes such as VAT and stamp duty on real estate and excise will also make home purchase attractive.

Reducing tax burden on rental income to put a downward pressure on rents which are currently very high. As the Reserve Bank’s restrictions on project finance available to developers is adding to housing cost as developers have to borrow from expensive private sources.

Pune’s residential real estate sector indicates that there is no scope for any reduction in prices. The real question is customers’ is ability to afford the increased prices.

Homes are needed this is not the question but the real question is whether the aspirations of home-buyers can be met on the basis of affordability..?

Direction of inflation is given, indication from the RBI that interest rates will moderate, the current cost structure for developers and most importantly the stock position and the price movement in 2011. As Pune will be seeing the rise in price of 15 to 18 % during the year 2012.

Pune’s property market has been displaying remarkably resilient investment fundamentals due to the steady demand, expected rate reduction in residential real estate hasn’t materialized in fact it has been selective increases in many well-located and configured projects by branded developers. Pharande, Bajaj said the 1% interest rate subsidy which was provided for loans on an affordable housing last year should be expanded to include a wider price band of budget housing. More funds be allocated to infrastructure formation which would help unlock the inherent value of property market in Pune’s peripheral areas.

Pune residential real estate comes from its significant large corpus of low-to-mid income buyers. as this market is extremely sensitized to price and interest rate fluctuations that would not have as much as of an impact in large metros.