Budget 2026: Real Estate Prices: Steady or Rising? Know the Key Takeaways
The Indian real estate sector received mixed results from the Union Budget 2026-27, which Finance Minister Nirmala Sitharaman presented. The budget prioritizes infrastructure development, Tier II/III city development, and urban supply expansion, but offers no direct price reductions or significant tax advantages for metro and premium segment buyers.
The budget failed to deliver the expected increase in home loan deductions and GST reductions, which would have improved residential buyers’ affordability according to budget projections. Entry-level homes and luxury apartments are likely to maintain their current price trajectories. The introduction of funding mechanisms for dormant projects will result in enhanced market stability throughout the upcoming years.
The government plans to expedite the monetisation process for CPSE real estate assets through designated REITs, which will generate funds needed to resume suspended urban redevelopment projects. The allocation of ₹5,000 crore per City Economic Region (CER) over five years will focus on cities with populations exceeding five lakh to develop rental housing and InVITs and funding for infrastructure projects through challenge-mode.
This supply-focused approach aims to increase housing availability in Tier II/III cities, leading to lower price pressures and better housing options for middle-class buyers who reside outside of metropolitan areas.
The government plans to raise its capital expenditure by 9%, resulting in a total budget of ₹12.2 lakh crore to improve roads and essential facilities and city development projects that will meet the demands of Tier I and Tier II cities. Mumbai and Delhi will experience a 10-15% increase in metro prices due to their strong sales growth for FY25, while Tier II cities will benefit from better planning and supply, leading to permanent value increases.
Experts suggest long-term benefits via the Infrastructure Risk Guarantee Fund, supporting developers and jobs. While luxury real estate may thrive, middle-class buyers may find better opportunities in Tier II cities for future growth and urban investment.
In summary, the 2026 budget shifts focus from demand-side subsidies to supply-side monetisation, with a strong emphasis on Tier II/III cities and infrastructure development. This approach is expected to bring stability to the real estate market and provide better housing options for a broader range of buyers.
