Indian home loan market expected to double to 48 lakh cr in 5 years: SBI report

India’s home loan market, currently valued at around ₹24 lakh crore, is expected to double over the next 5 years, with the mortgage-to-GDP ratio increasing commensurately from the current 11%, according to the Economic Research Report ‘Ecowrap’ from the State Bank of India.

This will reflect the general trend of the country’s aspirations to become a $5 trillion economy by then, according to the report.

The share of “housing loans” in “bank credit” increased from 13.1% in March 2020 to 14.4% in June 2022. Housing accounts for around 50% of personal/retail loans.

The SBI’s Economic Research Department (ERD) noted that the total housing loan portfolio grew by 10% in FY22, with Tier 3 and Tier 4 districts growing at a much faster rate than Tier 3 districts. level 1 and 2, after the pandemic.

The compound annual growth rate of the real estate loan portfolio in fiscal years 22 and 2019 was 11%, with higher growth in Tier 3 and 4 districts of 12-13%.

Growth in small towns

The report says house prices rose more in small towns and suburbs than in big cities over the past year, reflecting shifts in demand for residential housing.

Visakhapatnam, Guwahati, Raipur, Surat, Vadodara, Jaipur, Lucknow, Dehradun and Coimbatore witnessed higher house price growth.

Soumya Kanti Ghosh, the group’s chief economic adviser, believes the growing trend of home-based work and self-employment has led to increased demand for housing in small towns.

Town Growth in March 2022 Growth in March 2021
Visakhapatnam 11.3% -2.5%
Guwahati 15.7% -6.3%
Raipur 19.1% -1.8%
Surah 11.2% -5.5%
Vadodar 12.6% No change
Jaipur 9.6% -1%
Lucknow 17.4% -1.8%
Dehradun 11.6% -7.4%
Coimbatore 17.7% -0.9%

New disbursements showed maximum annual growth in Tier 3 and lower districts in FY22 compared to FY19, according to the report. Of the top 20 Tier 3 districts, the maximum number of districts comes from Punjab and Karnataka (5 each). These being 20 semi-urban districts, their share in the GDP is about 2.9%.

Among Tier 4 districts, Uttar Pradesh tops the list with 6 districts in the top 20 with maximum growth in new disbursements in FY22 compared to FY19. rural districts, their share in GDP is about 0.8%.

Female borrowers

The ERD report noted that the number of female borrowers in new disbursements increased significantly in FY22 in Tier 3 and -4 districts.

Among the top 20 districts with the highest proportion of female borrowers in new housing loan disbursements in FY22, 6 districts are from Chhattisgarh, 3 from Gujarat and Haryana each. These districts have an average of 49% women in the total population.

Published on

August 08, 2022

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