How the implementation of Seventh Pay Commission's recommendations will boost the real estate sector?

“The implementation of 7th Pay Commission recommendation, in our view, is an important milestone in the real-estate cycle as an increase in salaries of government employees is likely to boost the demand for home purchases. The recommendations are expected to rise in incomes of 3.4 crore employees and pensioners once the state and central governments implement them. Hence, housing sector is expected to be the biggest beneficiaries of the rise in income and spending capacity of government employees.
While, on the supply side, the country's real estate sector is likely to be supported by recent easing of foreign direct investment (FDI) norms by the government, the implementation of the pay panel proposals will play a crucial role on the demand side.
The pay panel proposes a hefty salary and pension hike for Central government employees and pensioners. The recommended 16% rise in basic salary and the 138.7% increase in house rent allowance (HRA) could spur demand for housing. Also the subsidized housing loan limit has been hiked, while the period of continuous service to avail of it has been reduced.
Hence those employees who will see an increase in monthly salary are likely to play a key role in pushing up the demand in the housing sector.”
Amit Modi, Director, ABA Corp and Vice President, CREDAI, Western UP.