Affordable housing seen as unpriced dark horse from cement GST cut

Cement vs affordable housing: GST cuts trigger debate on who stands to gain the most

Affordable housing developers may emerge as the surprise beneficiaries of the government’s sweeping GST cuts, with analysts flagging that the market has yet to factor in the potential margin boost from lower input costs. While cement stocks such as Ultratech Cement, Ambuja Cement and Shree Cements rallied after the GST Council cut the tax rate on cement to 18 percent from 28 percent, the bigger upside could accrue to housing developers, particularly in the budget segment.

“The most meaningful gains from the tax cut will flow into real estate,” said independent analyst Ambareesh Baliga. “Cement companies have already absorbed the GST news, but we believe the market hasn’t factored in the nearly Rs 30 per square foot benefit this brings to affordable housing projects.”

Motilal Oswal’s Siddhartha Khemka agrees that both cement and real estate stand to gain. He noted that cement makers are already benefiting from robust demand, better realisations and higher Ebitda per tonne, with the GST cut serving as an additional positive trigger. “Going forward, cement players will not hesitate to pass on price hikes to buyers when needed,” he said.

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On the real estate side, Khemka was cautiously optimistic. Lower input costs can drive a re-rating of affordable housing stocks, which trade at relatively comfortable valuations. But he added that demand in the mid- and affordable segments has yet to show a material pick-up, which will be a key monitorable.

Market data highlight that weakness. According to Anarock Research, the share of affordable housing — defined as homes priced below Rs 40 lakh — in overall sales has plunged from 38 percent in 2019 to 18 percent in 2024, while its share in new supply has fallen even more sharply, from 40 percent in 2019 to 12 percent in the first half of 2025. Analysts say the GST cut, if passed on to buyers, could trigger a much-needed revival.

Developers are now gearing up for a stronger festive quarter, with experts pointing to a dual advantage: lower construction costs and greater policy clarity. By cutting taxes on cement, marble and granite, the reforms ease cost pressures for developers while enhancing affordability for buyers. Stable interest rates and seasonal demand could amplify the effect, lifting sentiment around the sector’s long-term prospects.

“The reduction in rates across a host of items will boost consumption, savings and investment by households, while easing EMI burdens,” said Samir Jasuja, Founder & CEO of PropEquity. “Coupled with falling home loan rates, this move will bring cheer in the festive season and beyond. The overall impact will translate into higher GST collections, increased government spending, and stronger economic growth.”

At its 56th meeting, the GST Council cut rates not only on cement but also across building materials. Marble and travertine blocks now attract 5 percent GST, down from 12 percent; granite blocks have been cut to 5 percent from 12 percent; while sand-lime bricks and stone inlay work also saw their levies halved to 5 percent.

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