Surge in housing loans reflects strong growth in India’s housing market – Money News

The Reserve Bank of India’s latest data on ‘Sectoral Deployment of Bank Credit’ has unveiled a remarkable trend in the housing sector. With a substantial surge in outstanding loans over the past two financial years, the data underscores the burgeoning growth of India’s residential real estate market and the escalating demand for homes nationwide.

According to the Reserve Bank’s data, credit outstanding to the housing sector, primarily comprising home loans, has increased significantly by Rs 10 lakh crore during the last two years to a staggering Rs 27.22 lakh crore as of March 2024, marking a noteworthy rise from Rs 17.26 lakh crore recorded at the end of March 2022.

The surge in housing sector loans reflects not only a robust growth trajectory but also indicates a growing appetite for homeownership among Indian consumers. As economic conditions stabilize and consumer confidence rebounds, individuals and families are increasingly opting to invest in residential properties, leveraging the availability of attractive financing options.

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Commenting on this, Aakash Ohri, Jt Managing Director & Chief Business Officer, DLF Ltd, said, “There is an unprecedented surge in the demand for homes, which has reached an all-time high in the past two years, particularly in the aftermath of COVID. This surge underscores a fundamental shift in people’s perception of homeownership, where the value of having a place to call home has become more apparent than ever before. Residential real estate has not only served as a sanctuary for end-users but has also emerged as an attractive investment avenue. The substantial returns offered by residential properties, especially luxury homes, have fueled an increasing trend of purchasing homes for investment purposes.”

“The shift towards remote work and hybrid work mode, along with the desire for larger living spaces, has further fueled the demand for residential properties. Looking ahead, the surge in the home loan segment is likely to continue in the coming years. With evolving lifestyle preferences and the increasing importance placed on owning a home, coupled with projected economic growth, we anticipate sustained momentum in the housing market,” he added.

The surge in housing sector loans is poised to have far-reaching implications for India’s real estate ecosystem. This influx of capital is expected to stimulate construction activity, bolster housing supply, and potentially address the persistent demand-supply gap in the residential real estate segment.

“Looking ahead, the home loan market in India is expected to continue its growth trajectory with Tier 1 cities contributing to a large portion of this growth. New age fund-cum-development companies, with high-quality equity participation, will be able to drive this growth by bringing global best practices and expanding the market. In addition, extended NCR which comprises of Tier 2 cities, with its significant infrastructural enhancements and government initiatives, is also setting the stage for sustainable development. These improvements are pivotal in shaping communities that are well-connected and prosperous. As living preferences evolve and government policies take effect, we are strategically positioned to lead the transformation in Indian real estate, driving this transformation and fulfilling the demand for vibrant urban living experiences,” said Mohit Malhotra, Founder & CEO, NeoLiv.

As aspirations for homeownership continue to drive consumer behavior, the surge in housing sector loans underscores the resilience and vitality of India’s real estate market. With the housing sector emerging as a key driver of economic growth, policymakers, developers and financial institutions are poised to capitalize on this momentum to foster a sustainable and inclusive housing market that caters to the diverse needs of the Indian populace.