Shares of Reality sector companies were up during the morning trading session of 18th of February, 2019. This surge in the prices of shares was due to the reduction in the GST rate of under construction properties. Or ready-to-move-in flats where the Completion Certificate is not issued.
The shares that were benefited from this news
As a result of this favored decision by the GST council towards the Realty sector. The stocks from the Realty sector had high bullish movement in the morning session. Prestige Estate Projects had the highest movement of the bunch rising over 6% breaking the 200 Rs price point. Unitech Ltd had risen over 4% with current market price being Rs 1.05. Further Sunteck Realty rose by 2.4% its market price being Rs 330. Also, Indiabulls Real Estate Ltd up by 2.2% currently trading at Rs 72.55, Oberoi Realty Ltd had given an upward move of 3.9% trading at price of Rs 489. Also DLF had also given a move of over 2.6% with its current market price being Rs 158.45.
The news that caused this surge in the sector
The interim finance minister Piyush Goyal had hinted in his budget speech that the GST Council may cut down the GST rates on under-construction residential properties. This proposal is going to be presented in the 33rd meeting of the GST council on the 20th February 2019. This meeting will supposedly take a decision regarding a reduction in the GST rate on Premium as well as affordable housing segment. The current GST rate on premium housing is 12% and 8% for affordable housing. There are speculations that the GST rate on premium housing will be reduced to 8% and for affordable housing the GST rate will be slashed to 3%.
Views of the Realty experts on this news
Even though the decision favors the Realty sector, the sector would prefer that the upcoming decision implements a uniform GST rate on under construction and Ready-to-move flats rather than reduction in the GST rate. It is expected that that the real estate sector may experience a minor, temporary lift on the back of a GST rate cut. A longer lasting positive affect can be with the removal of different rates and application of an uniform rate.
The upcoming elections are a major reason for such drastic reductions in the GST rates. This decision of the GST council under the Modi government may very well be the last one. This decision aims to help the lower and middle class people buy their dream house. That house in the affordable segment. Also the government aims to boost the retail real estate sector. It has been sluggish for quite for quite some time.