Union Budget 2025-26 Expectations: Affordable Housing Revival and Real Estate Growth

Anuj Puri

As the Union Budget 2025-26 approaches in February 2024, India’s real estate sector is optimistic under the Modi 3.0 government. After declining activity in the second half of 2024, the industry anticipates government measures to boost consumption and investment.

While tax reliefs and standard incentives are expected, infrastructure development remains a key driver for long-term real estate growth. Stimulus measures for SMEs, MSMEs, job creation, and skill development are also likely to enhance economic activity and support housing demand.

Reviving Affordable Housing

A major expectation is the revival of affordable housing—homes priced under INR 40 lakh. Once a growth engine, this segment has suffered post-pandemic. ANAROCK data shows:

• Sales share of affordable housing fell to 18% in 2024 from over 38% in 2019.
• Supply share in top 7 cities dropped to 16% in 2024 from nearly 40% in 2019.

The decline highlights the need for government intervention and targeted benefits to boost both supply and demand.

Proposed Measures for Affordable Housing

1. Reintroduce Credit-Linked Subsidy Scheme (CLSS) under PMAY

• Target EWS/LIG households for first-time buyers.
• Extend to loans for new construction or upgrading existing homes.
• Under PMAY (Rural), subsidies could help convert ‘kaccha’ homes into ‘pucca’ homes.

2. Restore 100% Tax Holiday for Developers

• Section 80-IBA incentives boosted affordable housing supply.
• Reinstating this benefit can significantly enhance project feasibility for developers.

3. Revise Affordable Housing Criteria

• Current price caps are unrealistic in high-cost cities like Mumbai.
• Suggested revision: INR 85 lakh in Mumbai, INR 60–65 lakh in other metros.
• Enables more properties to qualify for lower GST rates (1% without ITC) and subsidies.

Market Outlook for 2025

CY 2024 saw a slowdown due to general and state elections:

• Housing sales in top 7 cities declined 4% to ~4.46 lakh units.
• New launches fell 7% to ~4.13 lakh units (ANAROCK).

With targeted measures for affordable housing, CY 2025 could witness a revival, helping residential sales and launches regain pre-2024 levels.

Anuj Puri is Chairman, ANAROCK Group