The Indian real estate sector is witnessing a significant shift in demographics and market dynamics, driven by changing economic factors and infrastructure development across the country.

Homebuying Age Drops Dramatically

According to Shobhit Agarwal, CEO of ANAROCK Capital, the average homebuying age in India has seen a remarkable shift from the late 40s to the early 30s. This transformation is attributed to several key factors:

• Rising disposable incomes
• Easier access to credit
• Extended EMI (Equated Monthly Installment) tenures
• Growing aspirations among millennials and Gen Z to own homes earlier

Infrastructure Development Boosts Real Estate Demand

Infrastructure improvements across India are having a profound impact on the real estate market in various cities:

• Goa: The introduction of a second airport has reduced tourism seasonality, potentially boosting year-round demand for properties.
• Ayodhya: Improved road connectivity led to a residential project selling out completely within a month, highlighting the impact of infrastructure on property demand.
• Dehradun: The Delhi-Dehradun expressway has resulted in increased hotel occupancy and rates, demonstrating the positive effects of improved accessibility on the hospitality sector.

Commercial Real Estate Landscape

Major cities continue to dominate the commercial real estate sector:

• Primary hubs: Delhi, Mumbai, and Bangalore
• Secondary hubs: Chennai, Hyderabad, and Pune

These cities remain the focal points for commercial real estate development and investment.

Luxury Housing Segment Expands

The luxury housing market has seen significant growth, with minimum ticket sizes increasing from ₹1-2 crores to ₹3-4 crores. This expansion is driven by:

• Gains in the stock market
• Changing lifestyle preferences post-COVID

Extended EMI Tenures Improve Affordability

A notable trend in home financing is the extension of EMI tenures:

• Previous norm: 15-year payment periods
• Current trend: Payments spread over 25 years

This shift has improved affordability for many buyers, allowing them to purchase properties that may have been out of reach with shorter loan terms.

Market Outlook

The Indian real estate sector appears to be in a dynamic phase, with younger buyers entering the market and infrastructure development playing a crucial role in shaping demand across various regions. As cities become more connected and accessible, and as financing options become more flexible, the real estate landscape in India continues to evolve, presenting both opportunities and challenges for developers, investors, and homebuyers alike.

In a significant move poised to transform the Indian real estate sector, the government has announced the implementation of Next-Gen GST Reforms, slated to take effect on September 22, 2025. These reforms, approved by the GST Council under the leadership of Finance Minister Nirmala Sitharaman, promise to simplify the tax structure and potentially reduce construction costs, offering a boost to the housing market.

Simplified Tax Structure

The new GST framework marks a shift from the current four-rate system to a more streamlined structure:

• Merit Rate: 5.00%
• Standard Rate: 18.00%
• Luxury Goods Rate: 40.00%

This simplification is expected to ease compliance and reduce complexity in the tax system.

Impact on Construction Costs

One of the most significant outcomes of these reforms is the anticipated reduction in construction costs:

• Construction costs are projected to decrease by 3.00-5.00%
• This reduction is primarily due to lower GST rates on key materials like cement
• The cost savings could potentially translate to a 1.00-1.50% reduction in home prices

Real Estate GST Rates Unchanged

Despite the broader changes, the GST rates for properties remain consistent with the current structure:

Importantly, ready-to-move homes, resale properties, and land sales continue to be exempt from GST.

Benefits for Developers

The real estate development sector stands to gain from these reforms:

• Reduced material costs will lower overall project expenses
• Enhanced Input Tax Credit provisions will improve cash flow management

Sector-Wide Impact

The GST 2.0 reforms are designed to have a broad positive impact across the real estate spectrum:

• Residential Sector: Potential for increased affordability and demand
• Retail and Office Spaces: Expected boost due to simplified tax structure
• Transparency: Improved tax system likely to reduce cash-based transactions

Looking Ahead

As the implementation date approaches, the real estate industry is poised for a significant shift. The simplified GST structure, coupled with potential cost reductions, may stimulate demand in the housing market and bring about positive changes in commercial real estate as well.

While the full impact of these reforms will only be realized post-implementation, the announcement has already set the stage for strategic planning within the sector. Developers, buyers, and investors alike will be keenly watching how these changes unfold and shape the future of Indian real estate.