Statsguru: Are luxury homes fuelling the surge in home loan growth?

India’s residential real estate market is witnessing a boom amid sustained and robust housing demand and the consequent price rise. In particular, the demand for high-end housing properties has continued to be stable, with Indian homebuyers gravitating towards luxury.

 

According to the National Housing Bank’s (NHB) Residential Index (Residex), home prices at the end of September 2024 were 38.33 per cent higher than 2017-18. Prices of under-construction properties were up 42.95 per cent (Chart 1).

 

 

The share of outstanding individual housing loans (IHLs) of scheduled commercial banks (SCBs) and housing finance companies (HFCs) in gross domestic product increased from 7.3 per cent in 2014 to 11.29 per cent in 2024 (Chart 2).

 

 

The share of HFCs’ disbursement of IHL to high-income individuals grew from 17.1 per cent in September 2022 to 26.1 per cent in September 2024. However, the share of disbursement to low- and middle-income groups declined during the same period (Chart 3).

 

 

More than 58 per cent of the IHLs that HFCs disbursed in 2023-24 were more than ₹25 lakh in size, up from 54.34 per cent in 2021-22. The share of those up to ₹10 lakh was only 10.85 per cent (Chart 4).

 

 

On the other hand, the share of outstanding housing loans in SCBs’ total outstanding loans gradually inched up from 9.76 per cent in 2015 to 16.57 per cent in 2024 (Chart 5).

 

 

Southern and western Indian states dominate housing credit flow, with Maharashtra and Telangana having the highest ratio of outstanding IHLs to gross state domestic product (GSDP) – at 18.49 per cent and 18.44 per cent, respectively – in September 2024 (Chart 6).