Housing investment has one of the highest multiplier effects on the economy. The slowdown had already impacted the residential sector. But, now the pandemic may just put the final nail in the coffin.
The sector has been operating in a regulatory bog that led to increased cost and fostered delays. All those factors that have impacted the housing sector can be identified easily. A housing project can also be started after several approvals required from authorities.
The single-window clearing mechanism has been rolled out in pockets. A nationwide implementation may help save time and cost reduction in completion of an average housing project. The stamp duty and registration costs regime may also be worth a relook.
Such costs result in escalation of real estate transactions by about 5-8 per cent. They also contribute to government revenue in the longer run. On the other hand, such costs are enough for some buyers to postpone their decision to buy an apartment.
In order to help real estate developers reduce outflows, various governments have taken steps to waive or restructure the incidence of stamp duty.
These two measures are sufficient to save about a quarter of the costs towards a housing project. Without a shadow of a doubt such considerable reductions in cost will serve as a big booster to housing demand.
It is probably the right time to restart the real estate sector in a new way. Desperate times present the precise opportunity to bring about far reaching changes in the longer run.