Housing Market Booms As Credit Soars: Record High Reached For Home Loans
May 6th, 2024
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The Indian housing sector is experiencing a significant upswing, with credit outstanding reaching an all-time high of Rs 27.23 lakh crore in March 2024. This surge, according to the Reserve Bank of India's (RBI) data on 'Sectoral Deployment of Bank Credit,' represents a nearly Rs 10 lakh crore increase over the past two fiscal years.
Pent-up Demand Drives Growth
Experts from both the banking and real estate sectors attribute this growth to a robust revival in the residential property market post-COVID-19 pandemic. Suppressed demand from the past two years is finally being realised, leading to a surge in home-buying activity.
Data Unveils Housing Loan Growth
The RBI data reveals a substantial rise in housing credit outstanding, encompassing both priority sector housing and regular housing loans. In March 2024, the credit outstanding stood at Rs 27.22 lakh crore, a significant increase from Rs 19.88 lakh crore in March 2023 and Rs 17.26 lakh crore in March 2022.
Commercial Real Estate Sees Uptick
The data also indicates a rise in credit extended towards commercial real estate. In March 2024, the credit outstanding for this sector reached Rs 4.48 lakh crore, compared to Rs 2.97 lakh crore in March 2022.
Increased Property Launches and Sales Fuel Loan Growth
Samir Jasuja, CEO and MD of a leading real estate data and analytics firm, offers another perspective. He emphasises the significant increase in property launches and sales over the past two fiscal years as a primary reason for the rise in housing loans. Major Tier-1 cities have witnessed substantial price appreciation, ranging from 50 per cent to 100 per cent since FY 2021, contributing to a larger average loan size per property. Jasuja expects the housing loan segment to maintain its upward trend as the demand for residential real estate remains strong.
Long-Term Optimism for Housing Market
The Indian real estate sector, which supports over 200 ancillary industries like cement and steel, has witnessed a resurgence in demand since 2022. This follows a period of over a decade characterised by subdued sales and stable prices. While disruptions caused by RERA (Real Estate Regulation and Development Act), GST (Goods and Services Tax), and demonetisation impacted the sector, the renewed emphasis on homeownership post-pandemic has fueled a comeback. Industry experts even anticipate the sector to reach a landmark USD one trillion milestone by 2030.
Realtors Seek Increase in Tax Benefits
Real estate industry bodies like CREDAI and NAREDCO are lobbying the government to further boost housing demand by increasing tax sops on home loans. They propose raising the deduction allowed on home loan interest payments from the current Rs two lakh to Rs five lakh.
Long-Term Outlook Remains Positive
The long-term outlook for the housing market appears bright, with industry experts expecting the credit growth trend to continue alongside strong demand for residential real estate. Realtors believe the sector is likely in the second or third year of a long-term upcycle.
Source: timesproperty.com
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