The Indian real estate sector approaches Union Budget 2026 at a defining inflection point. After enjoying a spectacular post-pandemic bull run driven largely by high-end inventory and luxury launches, the market is showing signs of a structural shift. The frenzy of the luxury segment is beginning to stabilize, forcing developers and policymakers alike to turn their gaze back to the engine room of the economy: the middle-class homebuyer.
For the past three years, the narrative has been dominated by record-breaking sales in the premium category. However, industry insiders argue that sustainable long-term growth cannot rely solely on the affluent few. There is a growing consensus that the upcoming budget must address the widening gap between soaring property prices and stagnant affordability for the average salaried Indian. The wishlist this year is less about seeking generic concessions and more about recalibrating the market dynamics to favor volume-driven growth over value-driven spikes.
Also read: Union Budget 2026: Real estate seeks stability
The primary expectation centers on tax relief. The current tax deduction limit on home loan interest has remained unchanged for years, despite property prices and interest rates climbing significantly. A revision of this limit is seen as essential to putting more disposable income in the hands of potential buyers. This is particularly crucial as the market attempts to pivot from a luxury-led cycle to a value-driven one.
Tanuj Shori, Founder and CEO, Square Yards, articulates this necessary transition.
“The Indian housing market is clearly moving out of a luxury-led upcycle and into a more value-driven phase, with the mid-income segment poised to anchor growth as premium demand begins to stabilise. From the 2026 Union Budget, one should expect a sharper focus on improving affordability through enhanced tax relief for mid-income homebuyers, higher interest deduction limits and sustained investment in urban infrastructure. Equally important is policy support that encourages supply in the affordable and mid-market segments, as recent launches have been disproportionately skewed towards higher ticket sizes. A budget aligned to these realities can strengthen end-user demand, improve price-to-income dynamics and support a more balanced and sustainable phase of urban housing growth.”
Beyond the immediate financial math of buying a home, there is a deeper concern regarding the quality of urbanization itself. The real estate sector is inextricably linked to the livability of India’s cities. Investments in bricks and mortar yield diminishing returns if the surrounding infrastructure—air quality, water supply, and waste management—is crumbling. The industry is therefore looking to the Finance Minister for a macro-level intervention that treats urban development not as a civic amenity but as an economic imperative.
Amit Goyal, Managing Director, India Sotheby’s International Realty, highlights this broader economic context.
“This Union Budget comes at a critical moment, as a new global order is taking shape. India remains one of the fastest-growing major economies in the world, but the challenges are visible. The government will have to walk a fine balance between maintaining fiscal discipline to keep borrowing costs under control, while continuing to support growth and investment. Both are essential as India is to realise its ambition of becoming the world’s third-largest economy and a USD 5 trillion economy.
From a real estate perspective, the momentum of 2025 was unmistakable. However, for this momentum to sustain, buoyancy in the equity markets, which reflects overall economic strength, business investment sentiment, and foreign capital inflows must remain strong. It is imperative for the budget to announce measures that will encourage more FDI into the country.
Equally important are strong budgetary allocations for urban development. Improving liveability in Indian cities is no longer optional. We are battling multiple challenges simultaneously—air pollution, water quality, waste management, and urban infrastructure gaps. These are fundamental issues that directly influence quality of life, long-term investment confidence into real estate, and the sustainability of real estate growth. Addressing them meaningfully will be critical to supporting both economic expansion and India’s evolving urban aspirations.”
Finally, the supply side of the equation demands structural reforms that have been delayed for too long. The longstanding demand for ‘industry status’ remains a priority. Granting this would allow developers to access capital at lower rates, reducing project costs that could eventually be passed on to buyers. Furthermore, there is a strategic push to decentralize growth. The saturation of metros has made the development of Tier-2 cities a necessity, not a choice. This involves creating economic hubs that can support Global Capability Centres (GCCs), thereby generating employment and housing demand in new geographies.
Shrinivas Rao, FRICS, CEO, Vestian, outlines this roadmap for structural strengthening.
“The Union Budget 2026 should prioritise strengthening India’s economic fundamentals to effectively navigate global uncertainties. Accelerated development of tier-2 cities through enhanced infrastructure and improved connectivity with major urban centres is imperative and will require increased private sector participation. Granting industry status to real estate would improve access to institutional financing and catalyse private investment. Further, monetising government land, refining the definition of affordable housing, and promoting mixed-use developments would support sustainable, inclusive, and efficient urban growth. Additionally, the introduction of a central-level GCC policy is essential to establish a structured framework and sustain the long-term growth of Global Capability Centres in India.”
As February 1 approaches, the real estate sector waits to see if the government will provide the structural support needed to bridge the gap between India’s urban reality and its global aspirations.
