Realty stocks are having a good run on the bourses today morning and the top gainer, figuring in the top five gainers on the BSE is housing finance company, HUDCO. The stock price has gone up 5.5% to Rs.43.50 and volumes are up over 1.4 times. To think that less than a week ago, it had hit a new low at Rs.37.45.
The BSE realty index is up in the green, with 9 out of the 10 stocks posting gains; the lone loser is DLF.
With the Govt trying its level best to prop up the sagging realty market, the GST council helped further.
It has lowered tax rate on under-construction properties from 12% to 5% without input tax credit. It has also lowered the tax rate on affordable housing projects from 8% to 1%. The Govt is hoping that this lowering of tax will give the much boost to the sector.
The new tax rates will be applicable from April 1, 2019.
Finance Minister, Arun Jaitley also clarified on the definition of affordable housing, saying that it will be based on the carpet area of the apartment. Thus as per the new definition, affordable housing is a residential flat with carpet area of not more than 90 sq.meter or 969 sq.feet in non-metro cities and 60 sq.meter or 645 sq.feet in metro cities, having value of up to Rs.45 lakh.
The housing finance companies are up in the green today following this new tax rate on hopes that people will finally start buying and demand will get the much needed fillip. Unfortunately, in an election year, people always prefer to sit tight on their cash as the uncertainty factor has gone up.