Affordable housing finance sees subdued growth

A recent study by CRISIL shows that affordable housing finance constitutes 34% of the overall housing finance market:

- Mohan

The overall size of the affordable housing finance market in terms of loan outstanding was ₹10.6 trillion as of 9MFY24, which constituted around 34% of the overall housing finance market, reveals a recent study by CRISIL. A noteworthy feature is that public sector banks account for ~46% in this segment. On the other hand, housing finance companies' share was 27% (Outstanding loans of ₹2.8 trillion) followed by private banks at 24% (outstanding loans of 2.5 trillion).

As per government and RBI stipulations, housing loans with a ticket size of less than 2.5 million are considered as affordable housing loans.

SUBDUED GROWTH

The study, carried out for Bajaj Housing Finance, however, indicated that between fiscals 2019 and FY23, the growth in the affordable housing loans had remained subdued, with the segment having witnessed a CAGR of 5.6% as compared to overall housing loans, which has grown by ~12.6%. The study said this can be primarily attributed to a slowdown in economic activity, funding challenges due to NBFC crisis and the pandemic. It also noted that factors like adoption of hybrid work model and work from home, as well as the rising propensity to spend and rising standard of living due to rising incomes of individuals contributed to an increase in demand for bigger residential homes.