Budget 2026–27 reinforced the government’s urbanisation push, prioritising infrastructure development in tier-II and tier-III cities. The renewed emphasis on these cities is expected to create an additional growth lever for the real estate sector alongside tier-I markets, said real estate experts.
However, the absence of specific announcements on affordable housing has disappointed the real estate sector, which has been seeking a revision in the definition of affordable housing by raising the price cap from ₹45 lakh to ₹80–90 lakh. The allocations for the government’s flagship housing scheme, Pradhan Mantri Awas Yojana (PMAY) Urban 2.0, saw a marginal decline of 5.9 percent in the Union Budget 2026–27.
While Credai welcomed the government’s focus on creation of infrastructure, its national president Shekhar Patel said the association is “deeply disappointed that the Budget offers nothing concrete for affordable housing.”
With the current outdated definition of affordable housing, he said the affordable housing segment’s share could decline further from 18 per cent to nearly 12 per cent of total housing supply.
“This is a serious warning sign for India’s lower middle class and middle class. CREDAI believes that affordable housing is not a welfare scheme – it is economic infrastructure. It is a major driver of employment, consumption, and social stability,” Patel said.
Rising construction costs and land prices, without corresponding policy support, are pushing developers away from this segment, he said.
“If affordable housing supply continues to weaken, the consequences are clear: higher rentals, longer commutes, and growth of informal housing,” Patel said.
Anurag Mathur, CEO, Savills India also pointed out that the twin needs of additional incentives for affordable housing and measures to increase disposable incomes remain areas for further policy attention.
Ramani Sastri – Chairman & MD, Sterling Developers said that the sector was expecting further measures to improve housing affordability, including expanded definitions for affordable housing, targeted incentives for first-time homebuyers.
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Anuj Puri, chairman, ANAROCK Group said that from a real estate perspective, the Budget has delivered limited direct but various indirect benefits – acting more as a growth catalyst than an instant rescue cavalry.
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“One major disappointment for the real estate sector was that there were no major announcements for affordable housing, which has been in free fall since the pandemic. ANAROCK data indicates that the sales share of affordable housing plummeted after the pandemic – from over 38% in 2019 to 26% in 2022 to just around 18% in 2025,” he said.
Budget 2026 cuts PMAY Urban 2.0 allocation by 5.9%
The Union Budget 2026-27 saw a marginal dip of 5.9 percent in the government’s flagship housing scheme Pradhan Mantri Awas Yojana (PMAY) Urban 2.0.
The Union budget for 2026-27 has allocated ₹18,625.05 crore for the government’s PMAY (Urban) 2.0 scheme. The current allocation in 2026-27 budget estimates is 5.9 percent lesser than the budget estimates of 2025-26. In Budget 2025-26 the government had allocated ₹19,794 crore for PMAY Urban 2.0 scheme.
In the revised budget estimates of 2025-26, the allocation for PMAY Urban 2.0 was reduced to ₹7,500 crore.