Union Budget 2026: Markets eye tax relief, subsidies and incentives for affordable housing segment

Investors will be closely monitoring affordable housing lenders and developers. Key players include Aavas Financiers, India Shelter Finance Corporation, Aadhar Housing Finance, Aptus Value Housing Finance India, Repco Home Finance Ltd and GIC Housing Finance.

• Affordable housing sector anticipates budget to boost demand and loan growth.
• Analysts see home loan deductions, PMAY subsidies as triggers for key stocks
• Redefining affordable housing and tax incentives are top industry expectations

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Markets and Affordable housing players are hoping for measures that could boost demand and loan growth. Analysts say any increase in home loan interest deductions, PMAY subsidies, or tax incentives for developers could provide a near-term trigger for stocks such as Aavas Financiers, Aadhar Housing Finance, and Godrej Properties, while supporting broader market sentiment in the real estate segment. With Tier-II cities emerging as key growth drivers, the affordable housing space is increasingly seen as a  policy-sensitive sector.

Key Trends

·         Growing demand for affordable homes in metros and emerging Tier-II cities

·         Middle-income buyers increasingly impacted by high EMIs and interest rates

·         Developers focusing on stalled projects and rental housing models

·         Rise of infrastructure-led affordable housing clusters

Key Challenges

·         Outdated affordable housing definitions (Rs 45 lakh cap for metros)

·         High construction and land costs compressing developer margins

·         Delays in project approvals increasing costs

·         Limited fiscal incentives for first-time buyers in the middle-income group

Last Budget Highlights

·         SWAMIH Fund 2.0: Rs 15,000 crore allocated to complete stalled affordable and mid-income housing projects

·         PMAY‑Urban allocation: Rs 19,794 crore, a 36% increase, supporting delivery of 1 crore houses

·         Indirect tax support: GST relief for affordable housing projects

·         Focus on urban infrastructure to enhance housing delivery

Industry Expectations for Budget 2026

·         Home loan interest deduction under Section 24(b) raised to Rs 4–6 lakh

·         Redefining affordable housing: Rs 75–85 lakh for metros, Rs 60–65 lakh for non-metros

·         Revamped PMAY subsidies for middle-income groups

·         Reintroduction of Section 80-IBA tax holiday for developers

·         Single-window approvals to reduce project delays

·         Support for rental housing models in Tier-I and Tier-II cities

Stocks to watch

Investors will be closely monitoring affordable housing lenders and developers. Key players include Aavas Financiers, India Shelter Finance Corporation, Aadhar Housing Finance, Aptus Value Housing Finance India, Repco Home Finance Ltd and GIC Housing Finance. Analysts say measures like higher home loan deductions or PMAY subsidies could directly lift loan growth and asset quality for these companies, making them key beneficiaries if the Budget delivers on affordable housing support. In the affordable housing segment, we prefer big brands like Prestige Estates, while developers such as Godrej Properties and Puravankara could benefit from potential incentives on home loans, stamp duty, and GST,” said Axis Securities analysts.