Real estate sector eyes Union Budget 2025-26 for support

With the Union Budget 2025-26 imminent in February 2024, the real estate sector -as always - has significant expectations. In light of slightly lower housing market activity in the latter part of CY 2024, the industry hopes for government interventions, especially for affordable housing.

Although tax reliefs and other incentives are customary asks, what is likelier is that the government will prioritise the development of resilient infrastructure. While infrastructure development may not yield immediate benefits for end-users, it is a crucial catalyst for sustained growth in the real estate sector.



The Budget is also anticipated to prioritise economic stability and promote growth, particularly considering the lacklustre GDP figures from the previous two quarters. Stimulus measures for SMEs, MSMEs, job creation, and skills development efforts will help bulwark the economy.

Affordable Housing in Budget 2025?

Key expectation from the real estate sector includes industry status as well as a shot in the arm for the affordable housing segment. Previously a promising sector, affordable housing — where properties are priced below INR 40 lakh — has faced considerable challenges post-pandemic, resulting in a dramatic contraction of both demand and supply. ANAROCK data indicates that the sales percentage of affordable housing declined to about 18% in 2024, down from over 38% in 2019. Correspondingly, its proportion of the overall housing supply in the top seven cities decreased to 16% in 2024 from roughly 40% in 2019.

This significant drop underscores a pressing need for intervention. Affordable housing needs concentrated attention. Tax incentives to enhance supply and facilitate purchases are essential; however, the issues this sector faces also run deeper. A significant concern persists regarding the scarcity of urban land, especially in regions where affordable housing is urgently required.


The government could allocate centrally administered land — overseen by entities such as Indian Railways, Port Trusts, and the Department of Heavy Industries — for affordable housing. Other measures that would help include:

1. Reinstate the Credit-Linked Subsidy Scheme under the Pradhan Mantri Awas Yojana (PMAY).
This scheme for EWS/LIG households, which lapsed in 2022, ought to be revived to encourage first-time purchasers of budget homes. It would also encompass loans for new construction or the addition of critical amenities such as kitchens and bathrooms to existing residences. Under PMAY (Rural), subsidies may facilitate the transformation of 'kaccha' dwellings into 'pucca' residences, contingent upon meeting eligibility conditions.

2. Reinstate the 100% Tax Holiday for Developers
This tax exemption provided by Section 80-IBA of the Finance Act, 2016, significantly enhanced the availability of affordable housing. The reinstatement of this benefit would be a major boost by providing significant financial incentives to developers focused on affordable housing.

3. Amend Affordable Housing Standards
The existing definitions of affordable housing, determined by dimensions, cost, and purchaser income, need immediate re-evaluation. The size requirement of 60 sq. m. for carpet space is justifiable; nevertheless, the price limit of INR 45 lakh is impractical in high-cost urban centres such as Mumbai. The cap ought to be raised to a minimum of INR 85 lakh in Mumbai and INR 60-65 lakh in other metropolitan cities to align with local market conditions. These amendments would allow a greater number of homes to be classified as affordable housing, providing buyers access to reduced GST rates (1% without ITC) and additional subsidies.


In CY 2024, the real estate sector saw deceleration attributable to general and state elections, with housing sales in the seven major cities decreasing by 4% to about 446,000 units and new launches sliding by 7% to around 413,000 units, according to ANAROCK data. Nonetheless, with suitable incentives for affordable housing, CY2025 may witness a robust resurgence, enabling the residential sector to recover its 2023 peaks in sales and launches.

(This article has been written by Anuj Puri, Chairman, Anarock Group)