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The rollout of GST 2.0 from September 22, coinciding with the first day of Navratri, has been projected as a turning point for the real estate sector. With the Council slashing tax rates on key construction materials, developers and homebuyers are cautiously optimistic that this festive season could see affordability improve and demand rise across housing segments.
Under the revised structure, cement and ready-mix concrete now attract 18 percent GST, down from 28 percent. Bricks, tiles, and sand have been moved to the 5 percent slab from 18 percent, while paints and varnishes are taxed at 18 percent, also reduced from 28 percent. GST 2.0 has compressed the system into two principal tiers of 5 percent and 18 percent, while ultra-luxury items continue to face a 40 percent levy.
Real estate analysts estimate that the cut in GST on cement and other core materials could reduce overall construction costs by 3 to 5 percent. For homebuyers, this translates to potential savings of 1 to 1.5 percent in property prices, provided the benefits are passed on by developers and cement companies. Even a modest two to three percent cut in project costs could mean savings of ?1 to ?3 lakh for buyers, reducing upfront payments or lowering loan requirements.
G Hari Babu, national president of NAREDCO, said the GST reforms will lower construction costs by around ?1,000 per square meter. “If cement manufacturers pass on the benefits, the ultimate gain will be seen by customers in the form of more affordable homes. This will boost confidence and drive growth in the real estate sector,” he added.
The government’s decision has also been welcomed by realtors’ body CREDAI, which represents 13,000 members across the country. CREDAI chairman Boman Irani described the move as creating a “feel good factor” among buyers ahead of the festival season. CREDAI president Shekhar Patel noted that when combined with Budget 2025 tax incentives and the Reserve Bank’s repo rate cuts, GST rationalisation will provide a powerful stimulus to housing demand.
Anurag Mathur, CEO of Savills India, highlighted that the reforms would cut the GST burden by about 20 percent across residential, commercial, industrial, and warehousing projects. “Affordable and mid-segment housing will benefit the most as developers can pass on cost reductions to homebuyers, improving affordability and homeownership possibilities,” he said.
However, experts caution that immediate price drops are unlikely, especially for ongoing projects where procurement cycles are already advanced. Developers are more likely to roll out festive discounts, flexible payment options, and customised deals rather than cutting prices outright. The impact of GST 2.0 will be more visible in new project launches where procurement cycles start afresh. Developers launching projects after September are expected to see a two to four percent decline in construction costs, enabling more competitive pricing for buyers.
While affordable and mid-segment buyers may see incremental savings, the luxury housing segment is also showing renewed energy this festive season. Enquiries from high-net-worth individuals and ultra-HNIs are up by 15 to 20 percent, with demand strong in South Mumbai, Delhi’s Lutyens zone, and select markets in Bengaluru and Goa. “Luxury real estate continues to be valued for its capital appreciation, rental yields, and role as an inflation hedge,” said Ashwin Chadha, CEO of India Sotheby’s International Realty.
Affluent investors are also diversifying into financialised real estate products such as REITs, AIFs, and structured instruments that deliver annualised returns between 12 and 18 percent. This signals a hybrid approach where physical properties are balanced with yield-generating alternatives in wealth portfolios.
Meanwhile, festive sentiment is building momentum in mid and premium housing markets across NCR, MMR, Pune, and Ahmedabad. Developers report increased site visits, active buyer groups on social media, and a steady rise in weekend bookings. Ganesh Devadiga of Square Yards said the RBI’s 100 basis points cumulative rate cut, combined with GST benefits, is driving both confidence and conversions.
Several developers and platforms have already rolled out festive campaigns to capitalise on sentiment. Signature Global has announced a scheme with 25 percent upfront booking, complimentary gold coins, and a chance to win a luxury car on select projects this Navratri. Arkade Developers launched the “Shubharambh” campaign, offering 50-gram gold coins on bookings made between September 15 and October 2 across its Mumbai projects. Housing.com has unveiled its Mega Home Utsav 2025, billed as India’s largest online property festival, featuring 3,800 developers and channel partners, exclusive discounts, and verified listings across 30 cities.
Industry voices say the convergence of GST rationalisation, rate cuts, and festive campaigns is setting the stage for a strong close to the year. “GST reforms and RBI’s cuts have laid a solid foundation for robust demand,” said Pradeep Aggarwal, Chairman of Signature Global.
The combination of reduced construction costs, positive buyer sentiment, and attractive festive offers may not translate into dramatic price drops overnight, but the cumulative impact is expected to improve affordability and sustain housing demand well into the final quarter of 2025.
