Building affordable housing finance

Differentiation through agility, customer-centric solutions, and market penetration will be key for growth of companies in this segment

- YASHRAJ ERANDE GOPAL SHARMA

INDIA'S HOUSING DEMAND, particularly in the affordable segment, is set for rapid growth, driven by economic and demographic shifts. Despite low mortgage penetration (14% of GDP in India vs 67% in the UK), this figure is expected to rise to 21% by FY30. Rising affluence, an expanding middle class (15 crore households by 2030), and the nuclearisation of families are fuelling demand. Government initiatives like the Pradhan Mantri Awas Yojana (30 million houses sanctioned) further accelerate this trend. Notably, affordable housing will outpace the broader market, with its size projected to grow to ₹32 trillion by FY30, aligning with a 12-15% annual home loan market growth. This shift underscores affordable housing as a key driver in India's real estate sector.

The affordable housing loan market in India is currently estimated at ₹13 lakh crore, with housing finance companies (HFCs) holding a dominant 53% share. Scheduled commercial banks (SCBs) account for the remaining 47%. Despite HFCs playing a crucial role in financing affordable housing, their dominance is likely to face increased competition from SCBs, which are expanding their presence in this segment.