According to the Reserve Bank of India's data on 'Sectoral Deployment of Bank Credit,' credit outstanding to the housing sector surged by nearly Rs 10 lakh crore over the last two fiscal years, reaching a record Rs 27.23 lakh crore in March this year. Experts from the banking and real estate sectors attribute this growth to a robust revival in the residential property market following the COVID-19 pandemic, driven by pent-up demand. In March 2024, credit outstanding to the housing sector (including priority sector housing) stood at Rs 27,22,720 crore, up from Rs 19,88,532 crore in March 2023, and Rs 17,26,697 crore in March 2022, as per RBI data.
The data also reveals that credit outstanding towards commercial real estate reached Rs 4,48,145 crore in March 2024, compared to Rs 2,97,231 crore in March 2022. A significant surge in housing sales and prices was seen in the past two years, as per reports from various property consultants.
Factors driving growth in the housing sector:
- Post-COVID revival: There has been a strong revival in the residential property market post-COVID-19 in terms of property launches
- Affordable housing segment: The affordable housing segment witnessed a significant uptick due to government initiatives
- Pent-up demand: There has been pent-up demand for buying homes in the last two years following COVID-19, which is now being reflected in the housing credit growth.
“The rise in housing loans outstanding is primarily due to a significant increase in the number of properties launched and sold in the last two fiscal years, Samir Jasuja, CEO and MD of PropEquity told PTI. "Major Tier-1 cities have witnessed high rates of price appreciation ranging between 50-100 per cent since FY 2021, which has contributed to an increase in the average loan size per property," he said, expecting the housing loan segment to remain on an uptrend due to strong demand for residential real estate.
The real estate sector, which supports more than 200 ancillary industries, has been witnessing strong demand since 2022, after a decade of subdued sales and stable prices due to disruptions caused by new realty laws, GST, and demonetisation.
Industry experts believe the sector could reach a $1 trillion milestone by 2030.
Realtors believe the sector is in the 2nd or 3rd year of a long-term upcycle. To further boost housing demand, industry bodies like CREDAI and NAREDCO have been demanding the government to increase tax benefits on home loans, proposing an increase in the deduction allowed on payment of interest to Rs 5 lakh from the current Rs 2 lakh.
