How 7th Pay Commission recommendations help real estate industry in India

1 min read

In the last week of June, the cabinet gave the green signal for the recommendations of the 7th pay commission to raise salaries of all central government employees. The hike recommended was almost 23% affecting over one crore employees of government of India in a positive way.

Real estate inventories in various markets have seen a rise with buyer’s still adopting a wait and watch approach. The pay hike for salaries and pensions for government employees can certainly give a flip to this situation. The prices are at all time low, there are ample of choices available, making this an ideal time for investing in Indian real estate.

Take the case of Subhash Krishna, an engineer working with the central government. He is one of the beneficiaries of the government’s decision. “The rise in salary would enable me to afford mortgage easily” he says. Indeed, most of the government employees avail home loans to purchase their homes. This rise would make paying installments easy and motivate several hesitant buyers to now enter the realty market.

The effects of the pay commission decision have already started showing results. More people are now enquiring about possibility of owning homes. Special interest is being seen in the price segment of INR 25 lakhs – INR 50 lakhs which seems to be an ideal target range for middle class employees. Experts feel that arrears which are payable (the hike in pay is effective retrospectively from 1st January, 2016) can stimulate further demand for new housing projects, especially that demands just small token amounts for booking a flat or an apartment.

Coming specifically to real estate investing in India, demand is expected to rise in upcoming realty hotspots like South of Gurgaon, Thane, Greater Noida, Neo Bengaluru, Pune etc. Government employees are careful investors; they would prefer to invest in upcoming areas with good infrastructure potential, assurance of good quality of living & cost effective pricing. These areas are economical & have witnessed a good progress. Hence, after the seventh pay commission these places should see more activity than the traditional pricier locations.

Resident Editor