Budget 2026 is shaping up to be a defining moment for India’s real estate sector, as policymakers grapple with a widening divergence between booming luxury housing and a steadily weakening affordable segment. While premium and high-end homes have continued to attract strong buyer interest and capital inflows, the mass housing market, critical for first-time buyers and urban workforce absorption, has struggled under rising input costs, tighter margins and waning incentives.
Against this backdrop, the upcoming budget is being closely watched for signals that could recalibrate the housing ecosystem, revive affordability and restore balance without disrupting momentum in the upper end of the market. Industry stakeholders believe the budget 2026 has the potential to move beyond incremental tweaks and emerge as a true converging point. This time, it is expected to align fiscal support, taxation and urban policy with India’s long-term housing and growth ambitions.
The stress in India’s affordable housing segment has become increasingly hard to ignore, even as luxury and premium home sales continue to post robust growth. Developers, faced with rising land prices, construction costs and thinner margins, are steadily moving away from budget and mid-income projects, leading to a sharp contraction in supply where demand is structurally the strongest.
At the same time, higher property prices and elevated home loan rates have pushed EMI-to-income ratios to uncomfortable levels, stretching household finances and forcing many first-time and middle-class buyers to defer ownership. Industry estimates warn that without timely fiscal and policy support, India’s urban housing shortage could widen further, undermining the broader objective of inclusive urbanisation and long-term economic stability.
According to Rajjath Goel, Managing Director, MRG Group, the real estate sector needs stability, clarity and speed.
"From Budget 2026, we expect predictable tax frameworks, a supportive interest-rate environment and a streamlined approval system that reduces delays and cost overruns. Today, friction at multiple stages, from approvals to financing, directly impacts project timelines and buyer confidence. Faster clearances and consistent policy signals will allow developers to plan better and deliver on time, while giving homebuyers the confidence to commit to long-term purchases. Rather than short-term announcements, the industry is looking for structural reforms that recognise housing as a long-gestation, capital-intensive sector and support sustainable, long-term growth," Goel said.
Echoing the same sentiment, Salil Kumar, Director-Marketing and Business Management, CRC Group said the sector is now poised on the cusp of a far more evolved operating environment that will recognise and incentivise transparency, size, and sticking power.
"Industry status will widen access to funding sources and allow a better measurement of risk adjustment on developer projects. A functional single-window clearance mechanism will help minimise time and capital inefficiencies. These measures could be complemented by favourable tax support policies targeting homebuyers and continued investments in infrastructure to ensure that the demand remains broad-based and focuses on job creation and organised growth,” Kumar said.
Definition of 'affordable housing' needs urgent reset
Moreover, a growing consensus within the real estate industry is that the definition of ‘affordable housing’ itself needs an urgent reset. The Rs. 45-lakh cap, stakeholders argue, has become increasingly misaligned with land values and construction costs in major metros, prompting calls for city-specific price limits and clearer carpet-area norms to ensure benefits are not misused. Alongside this, developers and homebuyers are looking to Budget 2026 for meaningful tax and regulatory relief to revive demand and improve project viability. Rationalisation of GST on under-construction homes, the possible reintroduction of incentives such as Section 80-IBA, and higher interest-deduction limits on home loans are among the key measures being sought to ease cost pressures and restore momentum in the affordable housing segment.
Mohit Batra, Regional Director, Realistic Realtors, said, “The policy direction over the past few budgets has helped bring greater stability and transparency to the real estate sector, and we expect the budget 2026 to sustain this momentum. We implore the government to address housing affordability more realistically by revisiting tax deductions and income limits that no longer reflect current property values or loan sizes. Enhanced tax incentives can meaningfully ease the decision-making process for homebuyers and improve market absorption. Alongside this, a sustained infrastructure push remains essential to support urban expansion and unlock new housing markets. A Budget focused on infrastructure, execution efficiency and policy clarity can significantly strengthen the sector’s investability and long-term scalability.”
Beyond demand-side measures, Budget 2026 is also being seen as a crucial lever to restore confidence across the broader real estate ecosystem, particularly in unlocking projects stalled by escalating land prices, construction costs and tighter financing conditions. Industry participants argue that targeted tax reliefs, regulatory clarity and improved access to capital could help accelerate project completion and bring much-needed supply back into the market.
