The government’s ‘Housing for All’ project has created a huge demand for affordable housing in the past few years. Many players have moved from traditional housing to the low-income housing segment. The boost in this sector has also seen many players moving out of the already saturated metros, to outskirts & satellite towns to fulfil the housing demands of the ever-increasing population. According to data from NHB, 78% of the loans disbursed (2017-18) were for the purchase of houses costing less than Rs. 25 lakhs. Factors such as the rise of population, shift towards nuclear families, government SOPs, reverse migration is expected to drive the housing demand.
The rise in per-capita disposable income has increased the purchasing power of new home buyers. Also, with the increase in HFCs in the low-income housing space in the past few years, interest rates have now become competitive. This backed by easy repayment options and affordable EMIs have added to the increase in new home buyers in this segment.
A slew of government reforms has helped in picking up the pace of housing in tier 2/3/4 cities and towns. Initiatives such as smart cities, focus on urbanisation of satellite towns and smaller cities have led to a surge in growth and employment in these cities. The post pandemic reverse migration too has helped in further accentuating demand for housing. In addition to the above, Government run subsidy schemes have contributed to the growth of housing. As per NHB data, the overall subsidy provided under PMAY-CLSS amounted to a cumulative disbursement of Rs. 38,857.30 crore benefitting 16.78 lakh households till June 30, 2022.
CEO and MD ,
Aadhar Housing Finance
With rising rural incomes and the government investing heavily in enhancing the rural demand, there will be a big demand from the rural and semi-urban areas as well. As published by the NHB, till June 30, 2022, a subsidy of 317.27 crore was disbursed under Rural Housing Interest Subsidy Scheme (RHISS) benefitting 8,787 households.
To add to the above factors, India has one of the largest young working populations with approximately over 66% of people under the age of 40. This is a favourable demographic for higher credit demand, home loans included. Also, owning a home in India, especially in smaller towns is looked like a form of social status. A large part of homes purchased are self-occupied rather than investments. This also leads to stronger repayment as the chances of default on these loans are lower, owing to that social status.
The housing finance penetration in India is quite low as compared to global developed markets. This is a huge opportunity for real estate players and HFCs alike, with favourable factors as mentioned above.
Disclaimer:-The data shared in the article is from published public sources and is in no way the author’s personal view.
This article is authored by Rishi Anand, CEO & MD, Aadhar Housing Finance
