CREDAI's Push for Affordable Housing Definition Revision: Key Demands and Real Estate Impact

The Indian real estate sector has once again raised concerns regarding policy support for affordable homes. The latest statement by Shekhar Patel, President of CREDAI, has brought renewed focus on the need to revisit the affordable housing framework in India. According to industry representatives, expectations from the Union Budget 2026 were high, especially for reforms in housing affordability. However, several demands remained unaddressed, leading the industry body to continue discussions with the government.

The Affordable housing definition introduced in 2017 places restrictions on both unit size and price. It caps the property value at ₹45 lakh and defines size limits of 60 square metres in metro cities and 90 square metres in non-metros. This framework has remained unchanged for nine years.

Through the CREDAI demand to remove ₹45 lakh cap, the developers’ association argues that affordability should be defined primarily by size, not by price. With inflation rising steadily, construction costs and property prices have increased significantly. The current price cap does not reflect today’s market realities.

The ₹45 lakh price cap has directly influenced taxation under the Affordable housing GST structure. Homes priced below ₹45 lakh attract 1% GST, while those above are taxed at 5%. This difference affects both developers and buyers.

However, as property prices rise due to land cost and material inflation, many homes exceed ₹45 lakh even if they are small in size. As a result, they lose affordable housing benefits, reducing supply and buyer incentives.

Industry data shows that affordable homes once contributed nearly 50% of total housing supply and demand in 2022. However, due to the rigid definition and rising costs, the Affordable housing supply decline has been visible.

Last year, the share dropped to around 18%. If policy changes are not implemented, industry leaders warn that it could fall below 10%. This would significantly affect middle-class and lower middle-class buyers who rely on affordable housing options.

The CREDAI Budget 2026 expectations included stronger tax incentives and reforms in housing policy. According to Patel, the real estate sector hoped for a revised affordability definition and additional support mechanisms.

While infrastructure and other sectors received attention, affordable housing reforms were not addressed as expected. The developers’ body now plans to continue engaging with the government and NITI Aayog to revisit policy structures.

One major suggestion is the introduction of an MSME style credit guarantee for housing. Currently, many middle-class buyers struggle to secure sufficient home loans due to limited documented income.

Through the proposed Credit guarantee scheme for middle class homebuyers, the government would back a portion of housing loans, similar to MSME support schemes. This would encourage banks to provide higher loans at standard interest rates instead of forcing buyers to rely on private financiers charging 14% to 18% interest.

Another concern relates to the Housing loan tax deduction new regime. Under the old tax regime, buyers could claim up to ₹2 lakh deduction on home loan interest. However, most taxpayers have shifted to the new regime, where this benefit is unavailable.

CREDAI argues that home loan interest should be treated as a legitimate expense and allowed as a deduction regardless of the tax regime. This step could encourage homeownership among salaried middle-class individuals.

The Impact of GST on affordable housing segment remains significant. The differential GST rates aim to support affordable housing, but due to the price cap restriction, many projects do not qualify for lower taxation.

Removing the price cap while retaining size limits could ensure continued GST benefits without repeated revisions every few years. This approach may create long-term stability in the segment.

While affordable housing reforms are pending, infrastructure investments are expected to support broader real estate growth. The Gujarat infrastructure investment real estate growth 2030 outlook appears strong, particularly with events like the Commonwealth Games and World Police Games planned.

Estimates suggest infrastructure spending of nearly ₹1 lakh crore across Gujarat cities by 2030. This could boost housing, hospitality, commercial developments, and urban infrastructure in Ahmedabad and surrounding regions.

The leadership of CREDAI affordable housing initiatives indicates continued dialogue with policymakers. The industry body believes that revising the Affordable housing definition revision India framework is essential to revive supply and demand balance.

Developers argue that affordability must adapt to economic changes rather than remain fixed for nearly a decade. A flexible definition based on size instead of rigid price ceilings could create sustainable growth for both buyers and developers.

CREDAI has renewed its call to revise India’s affordable housing framework by removing the ₹45 lakh cap and introducing an MSME-style credit guarantee scheme. With affordable housing’s market share falling from 50% to 18%, developers warn it may drop below 10% without reforms. The industry also seeks restoration of home loan interest deductions and long-term GST clarity. While infrastructure investments may boost overall real estate, policy changes remain crucial to support middle-class homebuyers and revive affordable housing supply.