Home loans have increased significantly in recent years, indicating an unparalleled expansion in the Indian real estate market. According to data from the Reserve Bank of India (RBI), over the previous two fiscal years, outstanding credit to the housing industry increased by about Rs 10 lakh crore, reaching a record of Rs 27.23 lakh crore in March 2024. This increase represents a strong post-pandemic rebound in the housing sector.
Post-Pandemic Recovery Fuels Housing Demand
The COVID-19 outbreak delayed the plans of a lot of prospective homeowners. However, this pent-up desire detonated as limitations loosened and economic circumstances improved, resulting in a dramatic increase in property purchases. In an effort to make up for lost time during the epidemic years, people are now aggressively investing in real estate.
Government Push for Affordable Housing
The rise of affordable housing has also been largely attributed to government initiatives. Schemes like the Pradhan Mantri Awas Yojana (PMAY) have facilitated home ownership for more people, expanding the market and increasing demand.
Rising Home Sales and Prices
Numerous real estate experts’ reports show that home prices and sales have significantly increased across the board, particularly for cheap homes. This is not only a trend for residential buildings; commercial real estate is included as well. The RBI reports that there was an increase of Rs 1.5 lakh crore in the outstanding credit on commercial real estate loans from Rs 2.97 lakh crore in March 2022 to Rs 4.48 lakh crore in March 2024. This growth implies that companies are making aggressive investments in commercial real estate.
Shift in Priorities Post-Pandemic
The pandemic has shifted priorities for many, emphasizing the value of homeownership. People are now seeking spacious homes that can accommodate dedicated workspaces, enhancing the demand for larger and more versatile living spaces.
Strategies for Existing Borrowers
Existing house loan borrowers are under pressure due to fluctuating interest rates, but they may lessen this by moving to a home loan with a lower rate and paying off a portion of the loan early to lessen the total cost. Using this tactic, one can take advantage of the current property market boom while minimising financial stress.
A Promising Future for Housing Finance
The Indian real estate sector supports over 200 ancillary industries, including cement and steel, and has been experiencing strong demand since 2022 after a prolonged period of subdued sales and stable prices. Credit rating agency ICRA predicts that this trend will continue, with housing finance expected to grow by 12-14 percent annually in the near to medium term, buoyed by strong demand.
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