GST rate cut to boost housing sales, reduction of home prices

The reduction in GST on cement and other key building materials is a landmark reform and will provide a much-needed relief for the real estate sector in the ongoing festive season. This steep reduction in tax will help lower overall construction costs to some extent -- Ramani Sastri, CMD of Sterling Developers

House property sales have fallen across key cities including Bengaluru, Hyderabad, Mumbai and others owing to steep price rise seen in the last two years. Analysts pointed out that GST cut in key raw materials will definitely boost sales as the country approaches the festive season

Bengaluru: GST reforms announced by the government is likely to reduce the property prices in the residential housing segment, leading to increased sales in the coming quarters.

House property sales have fallen across key cities including Bengaluru, Hyderabad, Mumbai and others owing to steep price rise seen in the last two years. Analysts pointed out that GST cut in key raw materials will definitely boost sales as the country approaches the festive season.

“GST will definitely increase sales in the residential housing segment,” Satish BN, Founder &Managing Director of real estate consultancy firm, Skydealz told the Bizz Buzz.

Real estate firms have also expressed optimism over fall in GST rates on key raw materials, that will reduce housing prices.

“The reduction in GST on cement and other key building materials is a landmark reform and will provide a much-needed relief for the real estate sector in the ongoing festive season. This steep reduction in tax will help lower overall construction costs to some extent.This GST rationalisation will help buyers gain better affordability and more confidence to invest in houses, especially in the affordable and mid-segments where cost sensitivity is high,” Ramani Sastri, Chairman and MD of Sterling Developers said.

Post rate rationalisation announced on Wednesday, GST on key construction materials like cement and steel have come down from 28 per cent to 18 per cent, and on granite blocks and sand-lime bricks from 12 per cent to 5 per cent, directly translates into lower project costs and more affordable homes.

“Real estate industry already employs over 7 crore Indians, making it the country’s second-largest employer. These reforms will encourage developers to launch more projects, creating new jobs and improving buyer sentiment. Importantly, a simpler, more transparent GST framework can help resolve long-standing challenges around input tax credits and compliance,” Ashish Kukreja, CEO &Founder of Homesfy.in said.

According to real estate consultancy firm, ANAROCK, reduction of GST rates on cement will reduce the construction cost by around 3-5 per cent for developers.

“Developers, especially those engaged in creating affordable housing, will get major relief in terms of cash flows and margins. Our research reveals that the affordable housing category (below Rs 40 lakh) has seen its share of total sales decline from 38 per cent in 2019 to just 18 per cent in 2024.

The share of new supply dropped even more dramatically from 40 per cent in 2019 to just 12 per cent in H1 2025. The reduced construction costs, if passed on to homebuyers, can boost demand in these segments,” Anuj Puri, Chairman of ANAROCK Group said.