While the government is getting ready to unveil the Union Budget 2026, India's real estate industry is focusing on the government with renewed hopes. After years of rising costs for construction and fluctuating interest rates, and global economic uncertainty, experts in the industry believe that the coming budget could have an important impact in maintaining development and restoring affordability of housing across different segments.
Despite the macroeconomic challenges, real estate has demonstrated remarkable resilience in the last few years. The demand has been steady in major cities as well, and project deliveries have increased, and confidence among buyers has risen. But experts warn that if there isn't the right policy guidance, the momentum could remain concentrated in luxury housing, which leaves the affordable and mid-income groups unserved.
According to real estate experts, Budget 2026 offers a crucial opportunity to rethink policies and priorities. The most important thing to consider is revisiting the obsolete definitions of affordable housing. reshaping how the Goods and Services Tax (GST) structure, enhancing access to financing for builders, and providing tax relief to homeowners. Together, these steps will help the sector move into a more balanced, sustainable, inclusive, and growing phase that is sustainable and long-lasting.
Shift Needed Toward Affordable and Mid-Income Housing
One of the biggest problems highlighted by industry experts is the uneven character of the recent housing market. Recent launches of new projects in recent years have mostly been concentrated in larger ticket sizes, driven by the increasing construction and land costs.
"Policy support is essential to increase supply in the low-cost and mid-market categories, since the recent launch has been significantly focused on larger tickets," said Tanuj Shori, the CEO and Founder of Square Yards. He said that a budget that is in line with market trends will boost the demand of end-users as well as improve ratios of price-to-income and help support long-term urban housing expansion.
With consumer preferences shifting from a preference for luxury to values-driven purchases, the experts think that the mid-income group is well-positioned to be the foundation for the next growth phase, provided that affordability concerns are dealt with effectively.
Revisiting the Definition of Affordable Housing
The need to change what constitutes affordable housing is top of the agenda for the sector. Today, homes that cost upwards of Rs45 lakh and sizes of 60-90 square meters are considered affordable. Industry experts argue that these limits do not reflect current realities in urban life, particularly in cities in Tier 1 cities, where the cost of land and construction has been rising rapidly since the year 2017.
The real estate industry's expectations from the Union Budget 2026 are to redefine the definition of affordable housing and offer the people some financial relief," stated Anuj Puri, chairman of ANAROCK Group. He emphasized that rising prices in the cost of construction materials and labor costs have significantly reduced the margins of developers, making affordable housing increasingly uneconomical in the current norms.
Puri proposed raising the price limit to between 80 and 90 lakh, as well as increasing the size requirements to be more in line with consumer expectations. The changes, he suggested, can boost both demand and supply, particularly in cities with high density where affordability is becoming difficult to attain.
Tax Relief to Boost Homebuyer Affordability
It is also a primary factor for homeowners, particularly those who are in the middle-income bracket. While the cost of property has increased consistently, the income growth has not always kept up, which has put stress on budgets for families.
Industry leaders are calling for increased tax incentives to ease the burden. Shori stated that higher rates of interest deductions on mortgages could greatly increase affordability metrics. The current deduction limit is Rs 2 lakh per year.
In line with this, Ramani Sastri, Chairman and Director at Sterling Developers, urged the government to increase the interest deduction for home loans to Rs 5 lakh per year. He also proposed interest-free loans for buyers who are first-time buyers and fall within the category that is affordable housing category.
This could help to unlock unused demand from the end-user, increase ratios of price to income, and provide the much-needed boost for urban housing markets.
GST Rationalisation Remains a Key Demand
Another important expectation for the Budget of 2026 will be GST rationalisation. Developers have frequently criticized the excessive GST percentage of just 18 percent on construction contracts as a significant obstacle to the viability of projects, especially in the price-sensitive segment.
Many business leaders are seeking the reduction of GST to the 12% or 5% range for low and middle-income housing developments. "There is a pressing need for a more rational GST structure for residential properties, and more clarity regarding the tax system," said Dhiren Tharwani, Director of Tharwani Realty. He said that faster approvals, as well as better access to institutional financing, are equally important for the delivery of the most modern homes.
Alongside GST stamp duty, registration fees ranging between 7.5 percent to 12% across the states continue to cause a lot of pain for homebuyers. Industry experts believe that greater consistency in these fees could dramatically lower transaction costs and increase affordability, particularly for first-time buyers.
Capital Market Reforms and REIT Push
Beyond residential properties, many of those who are involved in the debate are also pushing for reforms that will increase the participation of capital markets in the real estate sector. Badal Yagnik, CEO and Managing Director of Colliers India, emphasised the necessity of balancing fiscal discipline with incentives that promote growth.
He emphasized the significance of making real estate investment Trusts (REITs), along with small and medium REITs (SM-REITs), more appealing to investors who are retail investors. "Standardisation of criteria for affordable housing and an infrastructure-driven supply-side push can lead to long-term growth across all asset classes," Yagnik stated, noting that incentives to promote sustainability in green structures should be an element of the budget agenda.
Improving Liquidity and Ease of Doing Business
Limits on liquidity continue to impede developers, specifically those who focus on mid- and low-income housing. Real estate experts are calling on the government to increase accessibility to capital, reduce the regulatory process, and increase efficiency in doing business.
Amit Jain, CMD of Arkade Developers, said meaningful tax rationalisation and targeted relief could dramatically increase the viability of projects and close the gap in supply-demand. "If the government can deliver the required reforms on this front, we will see better liquidity, quicker approvals, and increased confidence from investors," he said. These reforms, Jain added, could result in faster execution of projects as well as timely delivery and larger economic advantages.
Read More : Homebuyers Enter the Holiday Season With Renewed Optimism Amid Falling Mortgage Rates
Coworking and Commercial Real Estate Expectations
The flexible workspace and coworking segment has become a significant growth engine in India's changing commercial real estate sector. As hybrid models of work become popular, coworking businesses are also looking at the Budget 2026 to help.
Manas Mehrotra, founder of 315Work Avenue, has called for slab-based, concessional GST rates for coworking and the removal of blocked input tax credits on interior fit-outs. He also raised concerns about the 10 percent TDS on payments for coworking, which, he claimed, is a burden on the working capital of operators.
Budget 2026: A Defining Moment
As the anticipations increase, industry professionals are adamant that the Union Budget 2026 will be the defining event for Indian real property. Through addressing affordability issues while also rationalizing taxes and facilitating capital access, the government has an opportunity to ensure the current growth in the industry is translated into an inclusive, broad-based growth.
If these reforms are implemented, the experts believe that the real estate market in India could be able to move towards an economically sustainable future. One that is able to balance developer viability as well as affordability for homebuyers and longer-term economic stability.
Source: Outlook Business
.jpeg&w=3840&q=75)
