Budget 2026 and affordable housing: Experts on what could change for buyers

From EMIs to GST tweaks, industry leaders break down what buyers can expect.

India’s affordable housing segment is facing a structural squeeze. Property prices have risen sharply, borrowing costs remain elevated, and policy definitions have failed to keep pace with market realities. While demand persists, especially among first-time buyers, experts say Union Budget 2026 must realign taxation, credit, and infrastructure policy to make affordable housing viable again for both buyers and developers.

 

Why affordability benchmarks need a reset

The definition of affordable housing has not changed since 2017, even as prices have surged. Rajnikant Mishra, founder and chairman of Amrawati Group, says home prices in most cities have risen 60-100 per cent over the past five years, while income growth has lagged far behind. This has pushed housing beyond the reach of middle-income families.

 

 

Simranjeet Singh, chief executive officer-SME retail business at Anand Rathi Global Finance, supports this view. He cited

 

RBI house price index data, showing a 45-50 per cent increase since 2017. He argues that Budget 2026 should redefine affordable housing to include homes priced up to Rs 75 lakh, targeted at households earning Rs 12-15 lakh annually, with loan sizes revised to Rs 60-70 lakh. Without this reset, Singh warns, the affordable housing segment will continue to shrink.

 

What tax relief could mean for homebuyers

Higher tax deductions could directly improve affordability. Mishra says a first-time buyer purchasing a Rs 45 lakh home with a Rs 36 lakh loan at 8.5-9 per cent interest could see EMI relief of Rs 4,000–8,000 per month if the Section 24(b) limit is raised to Rs 5 lakh, loan tenures are extended, or interest subvention is revived.

 

Singh adds that on a Rs 40 lakh loan at 8 per cent for 20 years, a mix of higher Section 24(b) limits, a 2 per cent interest subvention, and longer tenure could ease the burden by Rs 3,000–5,000 per month, materially improving purchase viability.

 

Supply-side stress and GST concerns

Developers, however, are retreating from affordable housing. Mishra points to razor-thin margins, denial of input tax credit under the 1 per cent GST regime, and prolonged approval delays. Tony Vincent, chairman of Aratt Developers and Ayatana Hospitalities, says the lack of input tax credit for under-construction projects pushes up costs and hurts transparency, arguing for a reworked GST structure.

 

Prakhar Agrawal, director at Rama Group, also calls for GST rationalisation and realistic affordability benchmarks, particularly in Tier-II and Tier-III cities, where end-user demand is rising but project viability remains fragile.

 

Infrastructure and Tier-II/III cities hold the key

Experts agree that the next phase of affordable housing growth lies beyond metros.

 

Ashish Bhutani, chief executive officer at Bhutani Infra, says sustained infrastructure development, improved connectivity, and rationalised taxation can strengthen investor confidence and support long-term urban growth.

 

Rohit Kishore, chief executive officer at Hero Realty, highlights Noida as an example where expressways, metro expansion, and the upcoming airport have driven end-user demand. He says enhanced home loan interest deductions and support for mixed-use and rental housing are essential to sustain affordability and livability.

 

Abhay Mishra, president and chief executive officer at Jindal Realty, echoes this, noting that Tier-II cities such as Sonipat are emerging as housing hubs due to expressway connectivity and industrial growth.

 

Policy clarity, skills, and the broader ecosystem

 

Beyond housing-specific measures, policy certainty matters.

 

Venket Rao, founder of Intygrat Law, says clearer taxation, GST rationalisation, and faster dispute resolution can reduce compliance burdens and improve investor confidence. Mohit Batra, regional director at Realistic Realtors, adds that revisiting tax deductions and income limits is critical to reflect current property values and loan sizes.

 

Rajanikant Mishra of Amravati Group also stresses the need for investment in urban services and workforce skilling, while Gaurav K Singh, chairman and founder of Womeki Group, links affordable housing growth to stronger MSME ecosystems, credit access, and skilling initiatives that support employment and urban demand.

 

Bhupindra Singh, chief operating officer at RISE Infraventures, says buyers today are value-conscious and long-term oriented, and policy alignment with these realities can unlock pent-up demand.

 

Taken together, experts say Budget 2026 has the tools to revive affordable housing, if it resets definitions, eases tax and GST burdens, and aligns infrastructure growth with household finances.