Budget 2026: What It Means For Homebuyers And The Real Estate Sector

The Union Budget 2026–27 has reinforced the government’s long-term commitment to infrastructure-led growth and housing, but has drawn mixed reactions from the real estate industry. While higher allocations for housing schemes such as PMAY, a record capital expenditure push, and tax clarity for home loan borrowers have been welcomed, industry leaders believe the budget stops short of providing targeted momentum for the affordable housing segment.

Developers say the emphasis on infrastructure, asset monetisation, and private investment will support medium- to long-term growth across Tier-II and Tier-III cities, even as near-term relief for first-time and budget-conscious homebuyers remains limited.

Commenting on the budget announcements, Saurabh Garg, Co-founder & Chief Business Officer, NoBroker, said the Union Budget offers a steady but cautious outlook for homebuyers. The increase in allocations for PMAY-Urban and PMAY-Gramin indicates that housing remains an important focus area for the government.

“These higher outlays can support demand in rural and smaller urban markets and help more families move closer to homeownership. Existing tax benefits on home loans also continue to provide some relief to buyers,” he added.

The budget, however, stops short of announcing any major, targeted measures for the affordable housing segment. This is a concern, as this category has seen a decline in both supply and sales over the past few years due to rising input costs and tighter project economics. Without specific incentives for developers or stronger interest support for buyers, the recovery of affordable housing may remain slow.

“For homebuyers, this could mean limited options in the lower and mid-income segments and little immediate impact on prices. At the same time, ongoing infrastructure spending and steady support for housing schemes may gradually improve access to new locations and better-connected suburbs. Overall, the budget maintains continuity in housing policy, but stronger interventions for affordable housing would have provided clearer momentum for first-time and budget-conscious buyers," Garg said.

In the Union Budget 2026-27, the government has proposed an amendment to Section 22(2) of the newly-introduced Income Tax Act, 2025 to clarify tax benefits for home loan borrowers.

“This proposal basically removes the ambiguity as to whether under the new Income Tax Act 2025 (which will come into effect on 1 April 2026), the interest charged on a home loan during the pre-construction period would continue to be covered within the 2 lakhs limit for self-occupied homes, as was the case under the old Income Taxt Act 1961. This is a welcome step as it provides continuity of tax relief and also provides confirmation that the interest paid during the pre-construction period or pre-acquisition period will be part of the tax deduction limit,” said Soumya Banerjee, Partner, AQUILAW.

So far as the real estate sector is concerned, the government’s decision to raise capital expenditure to Rs 12.2 lakh crore reinforces its long-term commitment to infrastructure-led growth, which is critical for the sector.

“A sustained infra push in Tier-2 and Tier-3 cities will improve connectivity, expand urban infrastructure, and unlock new residential markets beyond metros. As these cities become better integrated into regional growth corridors, we are likely to see more organised and planned real estate development. The introduction of the Infrastructure Risk Guarantee Fund further strengthens this ecosystem by improving funding confidence and reducing execution risk for long-gestation projects. Together, higher capex and risk mitigation measures can accelerate project timelines, improve asset quality, and encourage greater participation from developers and institutional investors,” said Amit Modi, Director, County Group.

Abhay Kumar Mishra, CEO & President, Jindal Realty, said, "The proposed Infrastructure Risk Guarantee Fund and asset monetisation through dedicated REITs are expected to unlock capital and strengthen investor confidence. With capital expenditure scaled up to Rs 12.2 lakh crore and targeted allocations for City Economic Regions, the emphasis on balanced urban growth is evident. Improved infrastructure, enhanced connectivity and planned urban development will significantly drive housing, commercial and mixed-use real estate demand, positioning emerging cities as the next growth engines of the sector."

The government’s intent to crowd in private investment, rather than rely solely on public expenditure, sends a strong and positive signal to the real estate sector.

“The introduction of dedicated CPSE REITs is a landmark reform that deepens capital markets and accelerates asset monetisation to support future growth. Measures to promote domestic manufacturing of construction equipment can further help reduce costs and improve execution efficiency. Additionally, the planned allocation of Rs 5,000 crore per city-economic region over five years for Tier-II and Tier-III cities, including temple towns, creates a strong runway for mid-market housing, while sustained investments in freight corridors, national waterways, and infrastructure will create enduring value for high-end residential developments across Tier-I cities,” said Amar Sarin, MD & CEO, TARC Limited.

Industry experts say the budget establishes a stable, enabling framework for sustained real estate development.

“Its singular focus on infrastructure-led growth will be highly critical for the expansion of the real estate sector. The rise in capital expenditure, along with the emphasis on urban development, will lead to a conducive environment for the growth of residential and commercial segments. Moreover, the higher allocations for urban infrastructure and increased resource transfers to states will accelerate growth in tier 2 and tier 3 cities, expanding housing and commercial opportunities beyond metros," observed Deepak Kapoor, Director, Gulshan Group.