Union Budget 2026: Housing sector expects more allocation for affordable housing and cost reduction measures

Real estate remains one of the most crucial parts of an individual’s daily life across the sections of society. Over the years, the housing sector has witnessed dynamic changes in the form of policy, like the Real Estate (Regulation and Development) Act (RERA) and the Pradhan Mantri Awas Yojana (PMAY).

The Union Budget for 2025–26 allocated ₹96,777 crore to the Ministry of Housing and Urban Affairs, marking a 17% increase over the previous year. On the other hand, the Finance Minister also announced several relief measures for landowners, and the tax exemption up to ₹12.75 lakh was a major boost for the sector, as it bolstered the housing demand.

In addition, the GST reduction on cement from 28% to 18% in the recent GST rate rationalisation move also proved to be a major benefit for the sector, thereby reducing the cost of construction.

In the upcoming 2026 Union Budget, the focus and expectations from the housing sector remain on measures that make affordable housing more accessible, particularly in urban areas.

Pradeep Aggarwal, Founder & Chairman of Signature Global (India) expects the Union Budget to focus on sustained policy support to improve housing affordability, ease liquidity constraints, and maintain long-term growth momentum. He said continued government interventions through fiscal incentives, financing support, and demand-stimulating measures will be critical in strengthening end-user confidence and ensuring the sector’s steady contribution to the broader economic recovery.

“The real estate sector currently contributes around 7% to India’s GDP and supports over 200 allied industries. Granting industry status would improve access to institutional funding, reduce borrowing costs, and enhance transparency, enabling the sector to play a stronger role in job creation and economic growth,” Aggarwal added.

He further said the extension and reintroduction of the Credit-Linked Subsidy Scheme (CLSS) could provide meaningful relief to aspiring homebuyers, especially first-time buyers, while stimulating demand across various housing segments.

CREDAI, in its proposals for the Union Budget 2026-27, Confederation of Real Estate Developers' Associations of India (CREDAI) has demanded that the government should provide tax incentives to developers for building affordable housing projects to cater to rising demand.

It also sought an increase in the ₹45-lakh price capitalisation under the definition of affordable housing and said the consumers will benefit if the cap is enhanced, as the GST on affordable homes is only 1%.

To boost the supply of affordable housing, the industry body demanded that the GST paid by developers on work contracts should be reduced to 12% from 18%, as this would bring down the prices of apartments. It said the government should also consider providing some tax incentives to real estate companies developing affordable housing projects.